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As filed with the Securities and Exchange Commission on March 8, 2007

Registration Number 333-            



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


AECOM TECHNOLOGY CORPORATION
(Exact name of Registrant as specified in its charter)

Delaware   8711   61-1088522
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

555 South Flower Street, Suite 3700
Los Angeles, California 90071
(213) 589-8000
(Address of principal executive offices, including zip code and telephone number)

John M. Dionisio
President and Chief Executive Officer
AECOM Technology Corporation
555 South Flower Street, Suite 3700
Los Angeles, California 90071
(213) 593-8000
(Name, address and telephone number of agent for service)

Copies to:

Jonathan K. Layne, Esq.
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Los Angeles, CA 90067
(310) 552-8500
  Eric Chen, Esq.
David Y. Gan, Esq.
AECOM Technology Corporation
555 South Flower Street, Suite 3700
Los Angeles, CA 90071
(213) 593-8000
  J. Scott Hodgkins, Esq.
Steven B. Stokdyk, Esq.
Latham & Watkins LLP
633 West 5th Street, Suite 4000
Los Angeles, CA 90071
(213) 485-1234

        Approximate date of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o


CALCULATION OF REGISTRATION FEE


Title of Shares to be Registered
  Proposed Maximum
Aggregate Offering Price(1)(2)

  Amount of
Registration Fee


Common Stock, $0.01 par value   $200,000,000   $6,140

(1)
Estimated solely for the purpose of computing the amount of the registration fee, in accordance with to Rule 457(o) promulgated under the Securities Act of 1933.
(2)
Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.


        THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.




The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we and the selling stockholders are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated March 8, 2007

PROSPECTUS

Shares

LOGO

AECOM TECHNOLOGY CORPORATION

COMMON STOCK


        AECOM Technology Corporation is offering                  shares of common stock and the selling stockholders are offering                  shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares. We estimate that the initial public offering price will be between $                  and $                  per share.


        We are applying to have our common stock traded on The New York Stock Exchange under the symbol "ACM."


        Investing in our common stock involves risks. See "Risk Factors" beginning on page 9.


PRICE $                  A SHARE


 
  Price to
Public

  Underwriting Discounts
and Commissions

  Proceeds to
AECOM

  Proceeds to
Selling Stockholders

Per Share   $     $     $     $  
Total   $     $     $     $  

        We have granted the underwriters the right to purchase up to an additional                  shares of common stock to cover over-allotments.

        The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        The underwriters expect to deliver the shares to purchasers on                , 2007.


MORGAN STANLEY MERRILL LYNCH & CO. UBS INVESTMENT BANK

GOLDMAN, SACHS & CO.

CREDIT SUISSE

D.A. DAVIDSON & CO.

                  , 2007



TABLE OF CONTENTS

 
  Page
Summary   1
Risk Factors   9
Special Note Regarding Forward-Looking Statements   18
Use of Proceeds   19
Industry and Market Data   19
Dividend Policy   19
Capitalization   20
Dilution   21
Selected Consolidated Financial Data   22
Management's Discussion and Analysis of Financial Condition and Results of Operations   24
Business   54
Management   71
Executive Compensation   78
Certain Relationships and Related Transactions   98
Principal and Selling Stockholders   99
Description of Capital Stock   101
United States Federal Income Tax Consequences to Non-U.S. Holders   106
Shares Eligible for Future Sale   109
Underwriters   110
Legal Matters   113
Experts   114
Where You Can Find Additional Information   114
Index to Consolidated Financial Statements   F-1

        You should rely only on the information contained in this prospectus or any related free writing prospectus we may authorize to be delivered to you. We have not, and the underwriters have not, authorized anyone to provide you with information different from, or in addition to, that contained in this prospectus or any related free writing prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are offering to sell, and are seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus or any related free writing prospectus is accurate only as of its date, regardless of its time of delivery, or of any sale of the common stock. Our business, financial conditions, results of operations and prospects may have changed since that date.

        Through and including                , 2007 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

        For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

i





SUMMARY

        This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before buying shares in this offering. You should read the entire prospectus carefully, especially the information under "Risk Factors." References in this prospectus to "AECOM," "the Company," "we," "us" or "our" refer to AECOM Technology Corporation and its consolidated subsidiaries, unless we indicate otherwise.

        Unless otherwise noted, references to years are for fiscal years. Our fiscal year consists of 52 or 53 weeks, ending on the Friday closest to September 30. Our fiscal quarters end on the Friday closest to December 31, March 31, June 30 and September 30. For clarity of presentation, we refer to all fiscal years and fiscal quarters in this prospectus as ending on September 30, December 31, March 31 or June 30, regardless of the actual date.

Our Company

        We are a leading global provider of professional technical and management support services to government and commercial clients on all seven continents. We provide planning, consulting, architectural and engineering design, and program and construction management services for a broad range of projects, including highways, airports, bridges, mass transit systems, government and commercial buildings and water and wastewater facilities. We also provide facilities management, training, logistics and other support services, primarily for agencies of the United States government.

        Through our approximately 28,000 employees in over 60 countries, we provide our services to a number of end markets, with particular strength in the transportation, facilities, also referred to as general building, and environmental markets. With over 60% of our employees operating outside the United States, we believe we are well positioned to grow both in the United States and internationally. According to Engineering News-Record's (ENR) 2006 Design Survey, we are the largest general architectural and engineering design firm in the world, ranked by 2005 design revenue. In addition, we are ranked by ENR as the leading firm in a number of design end markets, including transportation and general building.

        We are led by an experienced management team with a proven record of delivering growth in revenue and profits. Over the last five fiscal years, we have grown our revenue from $1.7 billion to $3.4 billion, reflecting a compound annual growth rate, or CAGR, of 18.3%. In that same period, our net income increased from $23.1 million to $53.7 million, reflecting a CAGR of 23.5%. Our revenue for the first quarter of fiscal 2007 grew 25.7% to $938.5 million, compared to $746.8 million for the same period last year. Over the past 10 years, we have enhanced our organic growth with the successful acquisition and integration of more than 30 complementary businesses. These acquisitions have enabled us to expand our professional service offerings, end market coverage and geographic presence. As of December 31, 2006, we had a total backlog of $2.9 billion compared to $2.5 billion at December 31, 2005, a 15.0% increase.

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        The following two charts illustrate the diversification of our fiscal 2006 revenue by client type and geography.

Fiscal 2006 Revenue by Client Type   Fiscal 2006 Revenue by Geography(1)
     
GRAPHIC   GRAPHIC

(1)
By location of project

        We offer our broad range of services through two business segments: Professional Technical Services and Management Support Services.

        Professional Technical Services (PTS).    Our PTS segment delivers planning, consulting, architectural and engineering design, and program and construction management services to government, institutional and commercial clients worldwide in end markets such as transportation, facilities, environmental—including water, wastewater and environmental management—and power. We provide services in connection with some of the largest and most complex projects in the world. Our PTS segment contributed $2.8 billion, or 81.0%, of our revenue in fiscal 2006, which represents an increase of 33.1% over fiscal 2005 PTS revenue. The following table highlights our principal PTS end markets along with a list of representative projects:

End Market

  Approximate
Percentage of
Fiscal 2006
PTS Segment
Revenue (%)

  Representative Projects
  Project
Locations

Transportation   30   • Second Avenue Subway
• Sydney Orbital Bypass
• Sutong Bridge
• John F. Kennedy Airport
  U.S.
Australia
China
U.S.

General Building   50   • 2012 London Olympics
• Pentagon Renovation
• British Broadcasting Company Headquarters
• Los Alamos National Laboratory
  U.K.
U.S.
U.K.
U.S.

Environmental   20   • Harbor Area Treatment Scheme
• Chicago Calumet and Stickney Wastewater Treatment Plants
• New York City Bowery Bay
  Hong Kong
U.S.

U.S.

        Management Support Services (MSS).    Our MSS segment provides facilities management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the U.S. government. We have over 9,000 employees managing projects for

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over 400 contract-specific job sites for U.S. government clients such as the Department of Defense, Department of Energy and the Department of Homeland Security. Our MSS segment contributed $647 million, or 18.9% of our revenue in fiscal 2006, representing an increase of 109.4% over fiscal 2005 MSS revenue. The following table highlights representative projects in our MSS segment:

Representative Projects

  Project Locations
  Clients
• Nevada Test Site   U.S.   U.S. Dept. of Energy
• Camp Doha Army Base   Kuwait   U.S. Dept. of Defense
• Fort Polk Training Center   U.S.   U.S. Dept. of Defense
• International Civilian Police (CIVPOL)   Various worldwide   U.S. Dept. of State

Our Market Opportunity

        According to ENR, the top 500 design firms in the United States, ranked by revenue, generated revenue of approximately $59.8 billion in 2005, an 11.8% increase over 2004. Our core end markets, namely transportation, facilities, environmental and government services, are anticipated to continue to grow, due to the following significant market trends:

        The global market for our services is highly fragmented, with thousands of providers. While many of these providers focus on regional niche markets, we believe that clients are increasingly seeking out larger firms such as us that can meet their needs around the world by providing a diverse array of services. This is contributing to a consolidation trend in this market, particularly among mid-size firms without notable technical niche specialties. Furthermore, our client base is becoming increasingly reliant on professional technical services or management support services that are either not readily available from internal resources or are not among their core competencies, or both.

        With our broad service offerings, end market coverage and geographic presence, we believe we are well positioned to capitalize on these favorable trends. Furthermore, we believe the industry consolidation trend will allow us to continue to advance our market leadership positions by selectively adding successful firms that are seeking a global platform for their services.

Our Competitive Strengths

        We believe we have the experience, relationships, technical expertise and personnel to lead our clients through their most complicated and critical technical undertakings while also delivering the level of consistent, quality service necessary to maintain long-term relationships and secure repeat engagements. Our key competitive strengths include:

        We have leadership positions in large, growing markets.    Based on ENR's rankings of firms by 2005 revenue, we are ranked number one in two of our core end markets, transportation and general

3



building. We also have leadership positions based upon ENR's rankings by 2005 revenue in many key specialty technical areas within our core end markets, including:

Transportation
  General Building
  Environmental
 
  Ranking
   
  Ranking
   
  Ranking
Mass Transit and Rail   1   Educational Facilities   1   Wastewater Treatment   2
Airports   1   Government Offices   1   Sanitary and Storm Sewers   2
Marine and Ports   1   Correctional Facilities   1   Sewerage and Solid Waste   2
Highways   1   Hotels/Convention Centers   3   Water Supply   4
Bridges   2   Commercial Offices   4   Clean Air Compliance   4

        We are diversified across service lines, end markets and geographies.    We perform a broad range of services for our clients, from planning and design to construction and project management and logistics. In addition, our 25 largest projects by gross profit in fiscal 2006 accounted for only 14% of our consolidated gross profit. We believe this diversification enables us to respond to and take advantage of changing business, technological and economic conditions worldwide, and allows us to better manage our business through market cycles. We further believe we are well-positioned in geographic areas with favorable growth prospects such as China/Hong Kong and the United Arab Emirates, where we are among the largest engineering design firms. This diversification has been a key factor in our historical growth and positions us for future growth.

        We combine global reach with local presence.    We combine local market knowledge and relationships with the technical expertise, scale, experience and resources of one of the world's largest global professional technical and support services firms. We believe that our ability to share capabilities and best practices across the firm delivers significant value to our clients and enables us to win and efficiently execute projects worldwide.

        We have strong and long-standing client relationships.    We have developed strong and long-term relationships with a number of government entities and large corporations worldwide. For example, we have provided services for over 30 years to clients such as the Illinois State Tollway Authority, U.S. Navy, Massachusetts Water Resources Authority and Port Authority of New York and New Jersey. We believe that these types of long-term relationships enable us to better understand and be more responsive to our clients' needs, which leads to repeat business and opportunities to expand the scope of services we provide to our clients.

        We have a successful history of executing and integrating mergers and acquisitions.    We believe one of our core competencies is successfully identifying, executing and integrating acquisition opportunities. We have consummated more than 30 mergers and acquisitions since 1998 that have enabled us to expand our end markets, service offerings and geographic reach. This acquisition activity has provided us with access to new markets at lower risk and faster speed relative to our entering the markets as a new participant. We have targeted, and we will continue to target, firms that enable us to add backlog, long-term client relationships and experienced executives who can provide leadership across our company. In addition, we derive our acquisition synergies through "cross selling" the capabilities of our newly acquired companies to our existing clients and our global capabilities to the clients of our newly acquired companies.

        We benefit from our experienced management team and employees.    Our Chief Executive Officer and the 10 most senior members of our operating units have an average of more than 20 years of experience with us and more than 25 years in our industry. We also have a large, experienced and skilled workforce. This human capital is essential in winning the most attractive work in our industry. In turn, our success in winning desirable and challenging projects assists us in attracting and retaining highly qualified people.

4



Our Growth Strategy

        We intend to grow our business by leveraging our competitive strengths and leadership positions in our core markets while opportunistically entering new markets and geographies. Key elements of our growth strategy include:

        Expand our long-standing client relationships and provide our clients with a broad range of services.    We have long-standing relationships with a number of governmental agencies, large corporations and public and private institutions worldwide. We will continue to focus on client satisfaction along with opportunities to sell a greater range of services to clients and deliver full-service solutions for their needs. For example, as we have grown our environmental business, we have provided environmental services for transportation and other infrastructure projects in which such services have in the past been subcontracted to third parties.

        Capitalize on growth opportunities in our core markets.    Our core end markets, including transportation, general building and environmental, are expected to continue to grow. We intend to build on our leading positions in these markets to increase our market share. With our track record and our global resources, we believe we are well positioned to win projects in these core markets. We believe that the need for infrastructure upgrades, environmental management and increased government spending and outsourcing of support services, among other things, will result in continued growth opportunities in our core markets.

        Continue to pursue our merger and acquisition strategy.    We intend to continue to attract other successful companies whose growth can be enhanced by joining us. This approach has served us well as we have strengthened and diversified our leadership positions both geographically, technically and across end markets. We believe that the trend towards consolidation in our industry will continue to produce attractive candidates that align with our merger and acquisition strategy. For example, we significantly strengthened our presence in the fast-growing market in the United Arab Emirates with the addition of Cansult Limited in September 2006.

        Strengthen and support human capital.    Our experienced employees and management are our most valued resources. Attracting and retaining key personnel have been and will remain critical to our success. We will continue to focus on providing our personnel with training and other personal and professional growth opportunities, performance-based incentives, opportunities for stock ownership and other competitive benefits in order to strengthen and support our human capital base. During fiscal 2006, we expanded our multi-year employee engagement initiative to focus more intensely on this critical objective.

Corporate Information

        We were formed in 1980 as Ashland Technology Corporation, a Delaware corporation and a wholly owned subsidiary of Ashland Inc., an oil and gas refining and distribution company. Since becoming independent of Ashland Inc. in 1990, we have grown by combination of organic growth and strategic mergers and acquisitions from approximately 3,300 employees and $363 million in revenue in fiscal 1991, the first full fiscal year of operations, to approximately 27,300 employees and $3.4 billion in revenue for fiscal 2006. Several of the operating companies within AECOM have histories going back more than 50 years. Our principal executive offices are located at 555 South Flower Street, 37th Floor, Los Angeles, California 90071 and our telephone number is (213) 593-8000. Our website is located at www.aecom.com. The information contained on our website is not a part of this prospectus.

5


The Offering

Common stock offered    
  By AECOM                       shares
  By the selling stockholders                       shares
  Total                       shares

Common stock to be outstanding after this offering

 

                    shares

Over-allotment option

 

                    shares

Use of proceeds

 

To repay borrowings under our credit facilities and our outstanding 83/8% senior notes due 2012, allow employees under our stock purchase plan to diversify their holdings and use the remaining proceeds for general corporate purposes, including possible future acquisitions. We will not receive any of the proceeds from the sale of shares by the selling stockholders. See "Use of Proceeds" for additional information.

Dividends

 

We do not anticipate paying any cash dividends in the foreseeable future.

Proposed New York Stock Exchange symbol

 

ACM

        Common Stock to be outstanding after this offering does not include at December 31, 2006:

        Except as otherwise indicated, all of the information in this prospectus assumes:

6


Summary Consolidated Financial Data

        You should read the summary consolidated financial data presented below together with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited consolidated financial statements, unaudited condensed consolidated financial statements and the related notes included elsewhere in this prospectus. The summary consolidated financial data presented below under "Consolidated Statement of Income Data" for the years ended September 30, 2006, 2005 and 2004 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. We derived the consolidated statement of income data for each of the years ended September 30, 2003 and 2002 and the consolidated balance sheet data as of September 30, 2004, 2003 and 2002 from our audited consolidated financial statements not included in this prospectus.

        The summary consolidated financial data presented below under "Consolidated Statement of Income Data" for the three months ended December 31, 2006 and 2005 and "Consolidated Balance Sheet Data" as of December 31, 2006 have been derived from our unaudited condensed consolidated financial statements that are included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary to state fairly our results of operations for and as of the periods presented. The results for any interim period are not necessarily indicative of the results that may be expected for a full year.

 
  Year Ended September 30,
  Three Months
Ended
December 31,

 
  2002
  2003
  2004
  2005
  2006
  2005
  2006
 
  (in millions, except share and per share data)

Consolidated Statement of Income Data:                                          
Revenues   $ 1,747   $ 1,915   $ 2,012   $ 2,395   $ 3,421   $ 747   $ 939
Cost of revenues     1,269     1,381     1,443     1,718     2,515     547     691
   
 
 
 
 
 
 
Gross profit     478     534     569     677     906     200     248
Equity in earnings of joint ventures     1     2     3     2     7     2     1
General and administrative expenses     430     467     485     581     810     177     219
   
 
 
 
 
 
 
Income from operations     49     69     87     98     103     25     30
Minority interest share of earnings     3     3     3     8     14     2     1
Gain on the sale of equity investment                             11
Interest expense—net     12     10     8     7     10     4     1
   
 
 
 
 
 
 
Income before income tax expense     34     56     76     83     79     19     39
Income tax expense     11     19     26     29     25     6     13
   
 
 
 
 
 
 
Net income   $ 23   $ 37   $ 50   $ 54   $ 54   $ 13   $ 26
   
 
 
 
 
 
 

Net income allocation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred stock dividend   $   $ 2   $ 5   $ 6   $ 2   $ 1   $
  Net income available for common stockholders     23     35     45     48     52     12     26
   
 
 
 
 
 
 
  Net income   $ 23   $ 37   $ 50   $ 54   $ 54   $ 13   $ 26
   
 
 
 
 
 
 

Earnings per share available for common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic   $ 0.89   $ 1.34   $ 1.71   $ 1.86   $ 1.88   $ 0.43   $ 0.89
  Diluted   $ 0.86   $ 1.29   $ 1.57   $ 1.68   $ 1.48   $ 0.40   $ 0.65

Weighted average shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic     25,815     26,429     26,300     25,940     27,428     26,644     28,800
  Diluted     27,001     28,589     32,127     31,989     36,329     32,612     39,518

7


 
  Year Ended or as of September 30,
  Three Months
Ended or as of
December 31,

 
  2002
  2003
  2004
  2005
  2006
  2005
  2006
 
  (in millions, except employee data)

Other Data:                                          
Depreciation and amortization   $ 23   $ 13   $ 13   $ 20   $ 40   $ 9   $ 7
Amortization expense of acquired intangible assets                 3     15     3     1
Capital expenditures     20     14     19     31     32     7     10
Backlog     1,710     1,660     1,620     2,000     2,500     2,480     2,851
Number of full-time and part-time employees     15,500     16,800     17,700     22,000     27,300     24,200     28,500
 
  As of September 30,
  As of December 31,
 
 
  2002
  2003
  2004
  2005
  2006
  2005
  2006
  2006
 
 
  (in millions, except employee data)

    
Actual

  Pro Forma,
as adjusted

 
Consolidated Balance Sheet Data:                                                
Cash and cash equivalents   $ 28   $ 120   $ 121   $ 54   $ 128   $ 67   $ 138      
Working capital     113     213     225     171     201     224     178      
Total assets     965     1,056     1,115     1,425     1,826     1,585     1,879      
Long-term debt excluding current portion     171     122     105     216     123     313     104      
Redeemable preferred and common stock and stock units, net of notes receivable     378     547     576     661     970     668     1,014      
Stockholders' (deficit) equity     (108 )   (181 )   (159 )   (240 )   (291 )   (237 )   (324 )    

8



RISK FACTORS

        Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus, including our financial statements and the related notes, before making a decision to buy our common stock. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

We depend on long-term government contracts, some of which are only funded on an annual basis. If appropriations for funding are not made in subsequent years of a multiple-year contract, we may not be able to realize all of our anticipated revenues and profits from that project.

        A substantial majority of our revenues are derived from contracts with agencies and departments of national, state and local governments. During fiscal 2004, 2005 and 2006, approximately 76%, 75% and 63%, respectively, of our revenues were derived from contracts with government entities.

        Most government contracts are subject to the government's budgetary approval process. Legislatures typically appropriate funds for a given program on a year-by-year basis, even though contract performance may take more than one year. As a result, at the beginning of a program, the related contract is only partially funded, and additional funding is normally committed only as appropriations are made in each subsequent fiscal year. These appropriations, and the timing of payment of appropriated amounts, may be influenced by, among other things, the state of the economy, competing priorities for appropriation, changes in administration or control of legislatures and the timing and amount of tax receipts and the overall level of government expenditures. If appropriations are not made in subsequent years on our government contracts, then we will not realize all of our potential revenue and profit from that contract.

        For instance, a significant portion of historical funding for state and local transportation projects has come from the U.S. federal government through its "SAFETEA-LU" infrastructure funding program and predecessor programs. This $286 billion program covers federal fiscal years 2004-2009. Approximately 79% of the SAFETEA-LU funding is for highway programs, 18.5% is for transit programs and 2.5% is for other programs such as motor carrier safety, national highway traffic safety and research. A key uncertainty in the outlook for federal transportation funding in the U.S. is the future viability of the Highway Trust Fund. The Highway Account within the Highway Trust Fund could have a negative balance as soon as 2009, based on the Department of Treasury projections of receipts and Department of Transportation projections of outlays. This raises concerns about whether funding for federal highway programs authorized by SAFETEA-LU will be met in future years.

Governmental agencies may modify, curtail or terminate our contracts at any time prior to their completion and, if we do not replace them, we may suffer a decline in revenues.

        Most government contracts maybe modified, curtailed or terminated by the government either at its convenience or upon the default of the contractor. If the government terminates a contract at its convenience, then we typically are able to recover only costs incurred or committed, settlement expenses and profit on work completed prior to termination, which could prevent us from recognizing all of our potential revenues and profits from that contract. If the government terminates the contract due to our default, we could be liable for excess costs incurred by the government in obtaining services from another source.

9



A delay in the completion of the budget process of the U.S. government could delay procurement of our services and have an adverse effect on our future revenues.

        In years when the U.S. government does not complete its budget process before the end of its fiscal year on September 30, government operations are typically funded pursuant to a "continuing resolution" that authorizes agencies of the U.S. government to continue to operate, but does not authorize new spending initiatives. When the U.S. government operates under a continuing resolution, government agencies may delay the procurement of services, which could reduce our future revenues.

Our contracts with governmental agencies are subject to audit, which could result in adjustments to reimbursable contract costs or, if we are charged with wrongdoing, possible temporary or permanent suspension from participating in government programs.

        Our books and records are subject to audit by the various governmental agencies we serve and their representatives. These audits can result in adjustments to the amount of contract costs we believe are reimbursable by the agencies and the amount of our overhead costs allocated to the agencies. In addition, if one of our subsidiaries is charged with wrongdoing as a result of an audit, that subsidiary, and possibly our company as a whole, could be temporarily suspended or could be prohibited from bidding on and receiving future government contracts for a period of time. Furthermore, as a government contractor, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which purely private sector companies are not, the results of which could harm our business.

Our business and operating results could be adversely affected by losses under fixed-price contracts.

        Fixed-price contracts require us to either perform all work under the contract for a specified lump-sum or to perform an estimated number of units of work at an agreed price per unit, with the total payment determined by the actual number of units performed. In fiscal 2006, approximately one-third of our revenues were recognized under fixed-price contracts. Fixed-price contracts expose us to a number of risks not inherent in cost-plus and time and material contracts, including underestimation of costs, ambiguities in specifications, unforeseen costs or difficulties, problems with new technologies, delays beyond our control, failures of subcontractors to perform and economic or other changes that may occur during the contract period. Losses under fixed-price construction contracts could be substantial and harm our results of operations.

We conduct a portion of our operations through joint venture entities, over which we may have limited control.

        Approximately 24% of our fiscal 2006 revenue was derived from our operations through joint ventures or similar partner arrangements, where control may be shared with unaffiliated third parties. As with most joint venture arrangements, differences in views among the joint venture participants may result in delayed decisions or disputes. We also cannot control the actions of our joint venture partners, and we typically have joint and several liability with our joint venture partners under the applicable contracts for joint venture projects. These factors could potentially harm the business and operations of a joint venture and, in turn, our business and operations.

        Operating through joint ventures in which we are minority holders results in us having limited control over many decisions made with respect to projects and internal controls relating to projects. Approximately 7% of our fiscal 2006 revenue was derived from our unconsolidated joint ventures where we generally do not have control of the entities. These joint ventures may not be subject to the same requirements regarding internal controls and internal control over financial reporting that we follow. As a result, internal control problems may arise with respect to the joint ventures, which could have a material adverse effect on our financial condition and results of operations.

10



Misconduct by our employees or consultants or our failure to comply with laws or regulations applicable to our business could cause us to lose customers or lose our ability to contract with government agencies.

        As a government contractor, misconduct, fraud or other improper activities by our employees or consultants failure to comply with laws or regulations could have a significant negative impact on our business and reputation. Such misconduct could include the failure to comply with federal procurement regulations, regulations regarding the protection of classified information, legislation regarding the pricing of labor and other costs in government contracts, regulations on lobbying or similar activities, and any other applicable laws or regulations. Our failure to comply with applicable laws or regulations or misconduct by any of our employees or consultants could subject us to fines and penalties, loss of security clearance, cancellation of contracts and suspension or debarment from contracting with government agencies, any of which may adversely affect our business.

Our defined benefit plans currently have significant deficits that could grow in the future and cause us to incur additional costs.

        We have defined benefit pension plans for employees in the United States, United Kingdom and Australia. At September 30, 2006, our defined benefit pension plans had an aggregate deficit (the excess of projected benefit obligations over the fair value of plan assets) of $117.2 million. At September 30, 2006, the excess of accumulated benefit obligations over the fair value of plan assets was $84.8 million. In the future, our pension deficits may increase or decrease depending on changes in the levels of interest rates, pension plan performance and other factors. If we are forced or elect to make up all or a portion of the deficit for unfunded benefit plans, our profits could be materially and adversely affected.

Our operations worldwide expose us to legal, political and economic risks in different countries as well as currency exchange rate fluctuations that could harm our business and financial results.

        During fiscal 2006, revenues attributable to our services provided outside of the United States were approximately 44% of our total revenue. Approximately 27% of our total fiscal 2006 revenue was contracted in non-U.S. dollar denominations. We expect the percentage of revenues attributable to our non-U.S. operations to increase further as a result of our strategic focus in areas such as Eastern Europe, China and the Middle East. There are risks inherent in doing business internationally, including:


        Any of these factors could have a material adverse effect on our business, results of operations or financial condition.

11


We work in international locations where there are high security risks, which could result in harm to our employees and contractors or material costs to us.

        Some of our services are performed in high-risk locations, such as Iraq and Afghanistan, where the country or location is suffering from political, social or economic problems, or war or civil unrest. In those locations where we have employees or operations, we may incur material costs to maintain the safety of our personnel. Despite these precautions, the safety of our personnel in these locations may continue to be at risk, and we may suffer the loss of key employees and contractors, which could harm our business.

Failure to successfully execute our merger and acquisition strategy may inhibit our growth.

        We have grown in part as a result of our mergers and acquisitions over the last several years, and we expect continued growth in the form of additional acquisitions and expansion into new markets. We cannot assure you that suitable mergers and acquisitions or investment opportunities will continue to be identified or that any of these transactions can be consummated on favorable terms or at all. Any future mergers and acquisitions will involve various inherent risks, such as:

        Furthermore, during the mergers and acquisitions process and thereafter, our management may need to assume significant mergers and acquisitions related responsibilities, which may cause them to divert their attention from our existing operations. If our management is unable to successfully integrate acquired companies or implement our growth strategy, our operating results could be harmed. Moreover, we cannot assure you that we will continue to successfully expand or that growth or expansion will result in profitability.

Our ability to grow and to compete in our industry will be harmed if we do not retain the continued services of our key technical and management personnel and identify, hire and retain additional qualified personnel.

        There is strong competition for qualified technical and management personnel in the sectors in which we compete. We may not be able to continue to attract and retain qualified technical and management personnel, such as engineers, architects and project managers, who are necessary for the development of our business or to replace qualified personnel. Our planned growth may place increased demands on our resources and will likely require the addition of technical and management personnel and the development of additional expertise by existing personnel. Also, some of our personnel hold security clearances required to obtain government projects; if we were to lose some or all of these personnel, they would be difficult to replace. Loss of the services of, or failure to recruit, key technical and management personnel could limit our ability to complete existing projects successfully and to compete for new projects.

        Additionally, in the past, we have promoted our employee ownership culture as a competitive advantage in recruiting and retaining employees. Although we intend to retain the essential elements of an employee ownership culture and do not intend to change our core values and operating philosophy,

12



if our employees or recruits perceive that becoming a publicly-traded company will negatively impact our company culture, our ability to recruit and retain employees may be adversely impacted.

Our revenues and growth prospects may be harmed if we or our employees are unable to obtain the security clearances or other qualifications we and they need to perform services for our customers.

        A number of government programs require contractors to have security clearances. Depending on the level of required clearance, security clearances can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain necessary security clearances, we may not be able to win new business, and our existing customers could terminate their contracts with us or decide not to renew them. To the extent we cannot obtain or maintain the required security clearances for our employees working on a particular contract, we may not derive the revenue anticipated from the contract.

Our industry is highly competitive and we may be unable to compete effectively, which could result in reduced revenue, profitability and market share.

        We are engaged in a highly competitive business. The extent of competition varies with the types of services provided and the locations of the projects. Generally, we compete on the bases of technical and management capability, personnel qualifications and availability, geographic presence, experience and price. Increased competition may result in our inability to win bids for future projects and loss of revenue, profitability and market share.

Our services expose us to significant risks of liability and our insurance policies may not provide adequate coverage.

        Our services involve significant risks of professional and other liabilities that may substantially exceed the fees that we derive from our services. In addition, we sometimes contractually assume liability under indemnification agreements. We cannot predict the magnitude of potential liabilities from the operation of our business.

        Our professional liability policies cover only claims made during the term of the policy. Additionally, our insurance policies may not protect us against potential liability due to various exclusions in the policies and self-insured retention amounts. Partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse affect on our business.

Our backlog of uncompleted projects under contract is subject to unexpected adjustments and cancellations and thus, may not accurately reflect future revenues and profits.

        At December 31, 2006, our backlog of uncompleted projects under contract was approximately $2.9 billion. We cannot guarantee that the revenues attributed to uncompleted projects under contract will be realized or, if realized, will result in profits. Many projects may remain in our backlog for an extended period of time because of the size or long-term nature of the contract. In addition, from time to time projects are delayed, scaled back or cancelled. These types of backlog reductions adversely affect the revenues and profits that we ultimately receive from contracts reflected in our backlog.

We have submitted claims to clients for work we performed beyond the scope of some of our contracts. If these clients do not approve these claims, our results of operations could be adversely impacted.

        We typically have pending claims submitted under some of our contracts for payment of work performed beyond the initial contractual requirements for which we have already recorded revenues. In general, we cannot guarantee that such claims will be approved in whole, in part or at all. If these claims are not approved, our revenues may be reduced in future periods.

13



In conducting our business, we depend on other contractors and subcontractors. If these parties fail to satisfy their obligations to us or other parties, or if we are unable to maintain these relationships, our revenues, profitability and growth prospects could be adversely affected.

        We depend on contractors and subcontractors in conducting our business. There is a risk that we may have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor, customer concerns about the subcontractor, or our failure to extend existing task orders or issue new task orders under a subcontract. In addition, if any of our subcontractors fail to deliver on a timely basis the agreed-upon supplies and/or perform the agreed-upon services, our ability to fulfill our obligations as a prime contractor may be jeopardized.

        We also rely on relationships with other contractors when we act as their subcontractor or joint venture partner. Our future revenues and growth prospects could be adversely affected if other contractors eliminate or reduce their subcontracts or joint venture relationships with us, or if a government agency terminates or reduces these other contractors' programs, does not award them new contracts or refuses to pay under a contract.

Systems and information technology interruption could adversely impact our ability to operate.

        We rely heavily on computer, information and communications technology and related systems in order to properly operate. From time to time, we experience occasional system interruptions and delays. If we are unable to continually add software and hardware, effectively upgrade our systems and network infrastructure and take other steps to improve the efficiency of and protect our systems, systems operation could be interrupted or delayed. In addition, our computer and communications systems and operations could be damaged or interrupted by natural disasters, telecommunications failures, acts of war or terrorism, computer viruses, physical or electronic security breaches and similar events or disruptions. Any of these or other events could cause system interruption, delays and loss of critical data, could delay or prevent operations, and could adversely affect our operating results.

Risks Relating to this Offering and Our Common Stock

There has been no prior public market for our shares and an active market may not develop or be maintained, which could limit your ability to sell shares of our common stock.

        Before this offering, there has not been a public market for our shares of common stock. Although we are applying for listing on the New York Stock Exchange, an active public market for our shares may not develop or be sustained after this offering. The initial public offering price will be determined by negotiations between the underwriters and our board of directors and may not be representative of the market price at which our shares of common stock will trade after this offering. In particular, we cannot assure you that you will be able to resell our shares at or above the initial public offering price.

The value of our common stock could be volatile.

        The overall market and the price of our common stock may fluctuate greatly. The trading price of our common stock may be significantly affected by various factors, including:

14


Our quarterly operating results may fluctuate significantly, which could have a negative effect on the price of our common stock.

        Our quarterly revenues, expenses and operating results may fluctuate significantly because of a number of factors, including:

        Variations in any of these factors could cause significant fluctuations in our operating results from quarter to quarter.

Our charter documents contain provisions that may delay, defer or prevent a change of control.

        Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to stockholders. These provisions include the following:

15


Future sales of our common stock may lower our stock price.

        If our existing stockholders sell a large number of shares of our common stock following this offering, the market price of our common stock could decline significantly. In addition, the perception in the public market that our existing stockholders might sell shares of common stock could depress the market price of our common stock, regardless of the actual plans of our existing stockholders. Immediately after this offering, approximately            shares of our common stock will be outstanding, or            if the underwriters' over-allotment option is exercised in full. Of these shares,            shares will be available for immediate resale in the public market, including all of the shares in this offering, and            shares will be available for resale 90 days following completion of this offering, except those held by our "affiliates." Of the remaining shares outstanding,             shares are subject to lock-up agreements restricting the sale of those shares for 180 days from the date of this prospectus. However, the underwriters may waive this restriction and allow the stockholders to sell their shares at any time.

        After this offering, we intend to register approximately            shares of common stock that are reserved for issuance upon exercise of options granted under our stock option plans. Once we register these shares, they can be sold in the public market upon issuance, subject to restrictions under the securities laws applicable to resales by affiliates.

Purchasers in this offering will experience immediate and substantial dilution in net tangible book value.

        The initial public offering price per share is expected to be substantially higher than the net tangible book value per share of our outstanding common stock. Purchasers of shares in this offering will experience immediate dilution in the net tangible book value of their shares. Based on an assumed initial public offering price of $                               per share, dilution per share in this offering will be $            per share (or            % of the price). In addition, we have issued options to acquire             shares of our common stock at a weighted average exercise price of $                              per share. To the extent these outstanding options are exercised, there will be further dilution to investors in this offering. Further, if we issue additional equity securities to raise additional capital, your ownership interest in our company may be diluted and the value of your investment may be reduced.

We do not expect to pay any dividends for the foreseeable future.

        We do not anticipate paying any dividends to our stockholders for the foreseeable future. Our credit facilities also restrict our ability to pay dividends. Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell our common stock and may lose some or all of the amount of your investment. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

We will incur increased costs as a result of being a publicly-traded company.

        As a company with publicly-traded securities, we could incur significant legal, accounting and other expenses not presently incurred. In addition, the Sarbanes-Oxley Act of 2002, as well as rules promulgated by the U.S. Securities and Exchange Commission and the New York Stock Exchange, require us to adopt corporate governance practices applicable to U.S. public companies. These rules and regulations will increase our legal and financial compliance costs.

16



If we do not timely satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, the trading price of our common stock could be adversely affected.

        Section 404 of the Sarbanes-Oxley Act of 2002 requires us to document and test the effectiveness of our internal controls over financial reporting in accordance with an established internal control framework and to report on our conclusion as to the effectiveness of our internal controls. It also requires our independent registered public accounting firm to test our internal controls over financial reporting and report on the effectiveness of such controls as of September 30, 2008. Our independent registered public accounting firm is also required to test, evaluate and report on management's assessment of internal control. Any delays or difficulty in satisfying these requirements could cause some investors to lose confidence in, or otherwise be unable to rely on, the accuracy of our reported financial information, which could adversely affect the trading price of our common stock.

17



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)

        This prospectus contains statements which, to the extent that they do not recite historical fact, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "expect," "estimate," "may," "will," "could," "plan" or "continue" and similar expressions are intended to identify forward-looking statements. Such forward-looking information involves important risks and uncertainties that could materially alter results in the future from those expressed in any forward-looking statements made by us or on our behalf. These risks and uncertainties include, but are not limited to:

        In addition, this prospectus contains industry data related to our business and the markets in which we operate. This data includes projections that are based on a number of assumptions. If these assumptions turn out to be incorrect, actual results could differ from the projections.

        We caution you that forward-looking statements are only predictions and that actual events or results may differ materially. In evaluating these statements, you should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by the forward-looking statements, including the factors that we discuss in the section entitled "Risk Factors."

18



USE OF PROCEEDS

        We estimate that our net proceeds (after deducting underwriting discounts and commissions payable to the underwriters and our estimated offering expenses) from this offering will be $                  million ($                  million if the underwriters exercise their option to acquire additional shares in full), based upon an assumed initial public offering price of $        per share, which is the mid-point of the offering range indicated on the cover of this prospectus.

        We expect to use approximately $        million of the net proceeds to repay amounts outstanding under our unsecured senior credit facility, which currently bears interest at the Interbank Offered Rate plus        %, or        % per annum, at March 1, 2007. We also expect to use approximately $     million of the net proceeds to repay all our outstanding 83/8% senior notes due 2012, which includes principal, accrued interest and a make-whole premium. We expect to use the remaining net proceeds to fund elections made by our employees under our stock purchase plan to diversify their holdings in connection with this offering, in an aggregate amount of approximately $                , and for general corporate purposes, which may include future acquisitions of businesses.

        A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) the net proceeds to us from this offering by $        million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

        Until we use the net proceeds as described above, we intend to invest the net proceeds in short-term securities.


INDUSTRY AND MARKET DATA

        We obtained the market, demographic, competitive position and similar data used throughout this prospectus from our own research and from surveys or studies conducted by third parties and industry or general publications. We have also derived data regarding our competitors and customers from their press releases and other public filings. This market, demographic, competitive position and similar data include, among other things, statements regarding the global market for engineering, design and support services, our position in the relevant markets, including the transportation, facilities and environmental markets, and the historical and projected growth rate of our industry. While we believe that each of these surveys, studies and publications is reliable, we have not independently verified such data. Similarly, we believe our internal research is reliable, but it has not been verified by any independent sources.


DIVIDEND POLICY

        We have not declared or paid any cash dividends on our common stock, and we do not anticipate doing so in the foreseeable future. We currently intend to retain future earnings, if any, to operate our business and finance future growth strategies. Our loan covenants require us to obtain the consent of the banks or the senior noteholders, as the case may be, prior to the payment of any cash dividends.

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CAPITALIZATION

        The following table sets forth our capitalization as of December 31, 2006 on an actual basis and as adjusted to give effect to our sale of             shares of common stock in this offering at an assumed initial offering price of $        per share and the application of the net proceeds from this offering as described under "Use of Proceeds." A $1.00 increase or decrease in the assumed public offering price of $        per share would increase or decrease each of additional paid-in capital, total stockholders' (deficit)/equity and total capitalization by approximately $        million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount and estimated offering expenses payable by us.

 
  As of December 31, 2006
 
  Actual
  Pro Forma
As Adjusted

 
  (in thousands, except share data)
(unaudited)

Cash and cash equivalents   $ 137,774   $  
   
 
Debt:            
  Current portion of long-term debt     23,626      
  Long-term debt, less current portion     104,115      
   
 
    Total debt     127,741      

Redeemable common and preferred stock and stock units

 

 

818,901

 

 

 
Notes receivable from stockholders     (36,607 )    
Redeemable preferred stock, Class F—authorized, 200,000, issued and outstanding, 47,000 as of December 31, 2006, and             shares as adjusted     117,500      
Redeemable preferred stock, Class G—authorized, 200,000, issued and outstanding 47,000 as of December 31, 2006, and             shares as adjusted     117,500      

Stockholders' (deficit)/equity:

 

 

 

 

 

 
  Common stock, $0.01 par value, authorized 150,000,000; issued and outstanding             shares pro forma as adjusted(1)          
  Additional paid-in capital     (290,797 )    
  Retained earnings          
  Accumulated other comprehensive loss     (33,694 )    
   
 
    Total stockholders' (deficit)/equity     (324,491 )    
   
 
Total capitalization   $ 820,544   $  
   
 

(1)
Common stock issued and outstanding does not include at December 31, 2006:

shares of common stock issuable upon the exercise of options outstanding under our stock incentive plans, with a weighted average exercise price of $        per share;

shares of common stock issuable upon conversion of our convertible preferred stock;

shares of common stock issuable upon conversion of our Class F convertible preferred stock at December 31, 2006;

shares of common stock issuable upon conversion of our Class G convertible preferred stock at December 31, 2006;

shares of common stock issuable upon redemption of our common stock units and convertible preferred stock units;

shares of common stock available for issuance under our 2006 Stock Incentive Plan;

shares of common stock available for issuance under our Equity Incentive Plan;

shares of common stock issuable upon conversion of our Class Y and Class YY shares; and

shares of common stock available for issuance under our Global Stock Plans.

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DILUTION

        Our net tangible book value at December 31, 2006 was $        million, or $        per share. Net tangible book value per share before the offering has been determined by dividing net tangible book value (total book value of tangible assets less total liabilities) by the number of shares of common stock outstanding at December 31, 2006. After giving effect to the sale of our common stock in this offering at an assumed initial public offering price of $        per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our adjusted net tangible book value at December 31, 2006 would have been $        million or $        per share. This represents an immediate increase in net tangible book value per share of $        to existing stockholders and dilution in net tangible book value per share of $        to new investors who purchase shares in the offering. The following table illustrates this per share dilution to new investors:

Assumed initial public offering price per share         $  
  Net tangible book value per share at December 31, 2006   $        
  Increase in net tangible book value per share attributable to new investors            
Adjusted net tangible book value per share            
Dilution per share to new investors         $  
         

        The following table sets forth, on the as adjusted basis described above, at December 31, 2006, the difference between the number of shares of common stock purchased, the total consideration paid, and the average price per share paid by the existing stockholders and by investors purchasing shares in this offering, before deducting estimated underwriting discounts and commissions and estimated offering expenses.

 
  Shares Purchased
  Total Consideration
   
 
  Average Price
Per Share

 
  Number
  Percent
  Amount
  Percent
Existing stockholders                   $  
New investors                   $  
   
 
 
 
 
  Total         %       % $  
   
 
 
 
 

        The discussions and tables above exclude the following at December 31, 2006:

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SELECTED CONSOLIDATED FINANCIAL DATA

        You should read the following selected consolidated financial data along with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the accompanying notes, which is included in this prospectus. We derived the consolidated statement of income data for each of the three years ended September 30, 2006, 2005 and 2004 and the consolidated balance sheet data at September 30, 2006 and 2005 from our audited consolidated financial statements, which are included elsewhere in this prospectus. The data for the three months ended December 31, 2006 and 2005 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments necessary for a fair presentation of this data. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. We derived the consolidated statement of income data for each of the years ended September 30, 2003 and 2002 and the consolidated balance sheet data as of September 30, 2004, 2003 and 2002 from our audited consolidated financial statements not included in this prospectus.

 
  Year Ended September 30,
  Three Months
Ended December 31,

 
  2002
  2003
  2004
  2005
  2006
  2005
  2006
 
  (in millions, except share and per share data)

Consolidated Statement of Income Data:                                          
Revenues   $ 1,747   $ 1,915   $ 2,012   $ 2,395   $ 3,421   $ 747   $ 939
Cost of revenues     1,269     1,381     1,443     1,718     2,515     547     691
   
 
 
 
 
 
 
Gross profit     478     534     569     677     906     200     248
Equity in earnings of joint ventures     1     2     3     2     7     2     1
General and administrative expenses     430     467     485     581     810     177     219
   
 
 
 
 
 
 
Income from operations     49     69     87     98     103     25     30
Minority interest share of earnings     3     3     3     8     14     2     1
Gain on the sale of equity investment                             11
Interest expense—net     12     10     8     7     10     4     1
   
 
 
 
 
 
 
Income before income tax expense     34     56     76     83     79     19     39
Income tax expense     11     19     26     29     25     6     13
   
 
 
 
 
 
 
Net income   $ 23   $ 37   $ 50   $ 54   $ 54   $ 13   $ 26
   
 
 
 
 
 
 

Net income allocation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Preferred stock dividend   $   $ 2   $ 5   $ 6   $ 2   $ 1   $
  Net income available for common stockholders     23     35     45     48     52     12     26
   
 
 
 
 
 
 
  Net income   $ 23   $ 37   $ 50   $ 54   $ 54   $ 13   $ 26
   
 
 
 
 
 
 

Earnings per share available for common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic   $ 0.89   $ 1.34   $ 1.71   $ 1.86   $ 1.88   $ 0.43   $ 0.89
  Diluted   $ 0.86   $ 1.29   $ 1.57   $ 1.68   $ 1.48   $ 0.40   $ 0.65

Weighted average shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic     25,815     26,429     26,300     25,940     27,428     26,644     28,800
  Diluted     27,001     28,589     32,127     31,989     36,329     32,612     39,518

22


 
  Year Ended or as of September 30,
  Three Months
Ended or as of
December 31,

 
  2002
  2003
  2004
  2005
  2006
  2005
  2006
 
  (in millions, except employee data)

Other Data:                            
Depreciation and amortization   23   13   13   20   40   9   7
Amortization expense of acquired intangible assets         3   15   3   1
Capital expenditures   20   14   19   31   32   7   10
Backlog   1,710   1,660   1,620   2,000   2,500   2,480   2,851
Number of full-time and part-time employees   15,500   16,800   17,700   22,000   27,300   24,200   28,500
 
  As of September 30,
  As of December 31,
 
 
  2002
  2003
  2004
  2005
  2006
  2005
  2006
 
 
  (in millions)

 
Consolidated Balance Sheet Data:                                            
Cash and cash equivalents   $ 28   $ 120   $ 121   $ 54   $ 128   $ 67   $ 138  
Working capital     113     213     225     171     201     224     178  
Total assets     965     1,056     1,115     1,425     1,826     1,585     1,879  
Long-term debt excluding current portion     171     122     105     216     123     313     104  
Redeemable preferred and common stock and stock units, net of notes receivable     378     547     576     661     970     668     1,014  
Stockholders' deficit     (108 )   (181 )   (159 )   (240 )   (291 )   (237 )   (324 )

23



MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion in conjunction with our consolidated financial statements and the related notes and other financial information included in this prospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in "Risk Factors."

Overview

        We are a leading global provider of professional technical and management support services for commercial and government clients around the world. We provide our services in a broad range of end markets and strategic geographic markets through a global network of operating offices and approximately 28,000 employees and staff employed in the field on a project-by-project basis.

        Our business focuses primarily on providing fee-based professional technical and support services and, as such, we are labor and not capital intensive. We derive income from our ability to generate revenues and collect cash from our clients through the billing of our employees' time and our ability to manage our costs. We operate our business through two segments: Professional Technical Services (PTS) and Management Support Services (MSS).

        Our PTS segment delivers planning, consulting, architecture and engineering design, and program and construction management services to institutional, commercial and government clients worldwide in major end markets such as transportation, facilities and environmental markets. PTS revenues are primarily derived from fees from services that we provide, as opposed to pass-through fees from subcontractors and other direct costs. As a percentage of PTS revenue, our other direct costs, including subcontractor and consultant costs, typically range from 30% to 38%. Our gross margin as a percentage of PTS revenue typically ranges from 44% to 48%, depending on the nature and scope of the underlying projects.

        Our MSS segment provides facilities management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the U.S. government. MSS revenues typically include a significant amount of pass-through fees from subcontractor and other direct costs. As a percentage of MSS revenue, other direct costs, including subcontractor, consultants and material costs typically range from 85% to 87%. Our gross margin as a percentage of MSS revenue typically ranges from 3% to 5%, depending on the level of other direct costs required, which can vary significantly from period to period.

        In total, our revenues are dependent on our ability to attract qualified and productive employees, identify business opportunities, allocate our labor resources to profitable markets, secure new contracts, renew existing client agreements and provide outstanding services. Moreover, as a professional services company, the quality of the work generated by our employees is integral to our revenue generation.

        Our costs are driven primarily by the compensation we pay to our employees, including fringe benefits, the cost of hiring subcontractors and other project-related expenses, and sales, general and administrative overhead costs.

Components of Income and Expense

        Our management analyzes the results of our operations using three financial measures that are not in accordance with generally accepted accounting principles in the United States (GAAP).

24



        The following table presents, for the periods indicated, a presentation of the non-GAAP financial measures reconciled to the closest GAAP measure:

 
  Year Ended September 30,
  Three Months
Ended
December 31,

 
  2002
  2003
  2004
  2005
  2006
  2005
  2006
 
  (in millions)

Other Financial Data:                                          
Revenues   $ 1,747   $ 1,915   $ 2,012   $ 2,395   $ 3,421   $ 747   $ 939
Other direct costs     671     725     776     933     1,521     332     436
   
 
 
 
 
 
 
Net service revenues     1,076     1,190     1,236     1,462     1,900     415     503
   
 
 
 
 
 
 
Stock match expense—direct     5     2     1     2     11     1     1
Other cost of net service revenues     593     654     666     783     983     214     254
   
 
 
 
 
 
 
Cost of net service revenues     598     656     667     785     994     215     255
   
 
 
 
 
 
 
Gross profit     478     534     569     677     906     200     248
   
 
 
 
 
 
 
Equity in earnings of joint ventures     1     2     3     2     7     2     1
   
 
 
 
 
 
 
Amortization expense of acquired intangible assets                 3     15     3     1
Stock match expense—general and administrative     6     1     1     1     4     3     1
Other general and administrative expenses     424     466     484     577     791     171     217
   
 
 
 
 
 
 
General and administrative expenses     430     467     485     581     810     177     219
   
 
 
 
 
 
 
Income from operations   $ 49   $ 69   $ 87   $ 98   $ 103   $ 25   $ 30
   
 
 
 
 
 
 

        We recognize revenues using the percentage-of-completion method. Under this method, revenue is recorded generally on the basis of the ratio of direct labor dollars incurred to the estimated total direct labor dollars. We review our progress on each contract periodically and losses, if any, are recognized as soon as we determine that the contract will result in a loss. Our revenues are primarily derived from fee-based professional and technical services that our employees provide to our portfolio of clients as well as from other direct costs such as subcontractor and direct material purchases. Increases in fees or billable hours of our employees tends to have a more positive impact on our profitability than do increases in other direct costs. Contracts that are more heavily weighted on other direct costs tend to have lower profit margins.

        On many projects we are responsible for other direct costs or pass-through costs that may include third party field labor, subcontracts, or the procurement of materials and equipment. We account for the reimbursement of these expenses as revenues as these costs are incurred. On projects where the client elects to pay these costs directly, however, pass-through costs are not reflected in our revenues or expenses. Thus, other direct costs can fluctuate significantly. We generally do not earn profits from pass-through costs with the exception when incremental costs are incurred relating to the level of effort expended by us on these pass-through costs for supervision, accounting services and similar activities. In the cases where we do mark-up costs and earn profits, the amount is typically insignificant.

25


        In the course of providing our services, we routinely incur "other direct costs" (i.e. payments to subcontractors and other "pass-through" costs). Generally, these other direct costs are passed through to our clients and are included in our revenues when it is our responsibility to procure or manage such costs under the contract. Because other direct costs can vary significantly from project to project and period to period, changes in revenue may not be indicative of our business trends. Accordingly, in addition to revenues, we report net service revenues, and our discussion and analysis of financial condition and results of operations uses net services revenues as a point of reference. Net service revenues and gross margin (gross profit as a percentage of net service revenues) are non-GAAP measures and may not be comparable to similarly titled items reported by other companies. We believe that net service revenues are a more reflective measure of our business because total revenues include significant amounts of other direct or pass-through costs.

        Cost of net service revenues reflects the direct cost of our own personnel (including fringe benefits and overhead expense) associated with net service revenue.

        Our total cost of net service revenues, as well as in our general and administrative costs, includes an expense for company-provided stock matches. Our strategy as a privately-held company has been to encourage employee ownership of company stock by providing stock matches on certain purchases of our common stock and common stock units, as well as a means to raise capital as there has not been a public market to do so. To the extent that employees purchase stock and stock units directly or by designating previously earned retirement funds, we have provided a match on a portion of the stock purchased. In addition, in mergers and acquisitions, as well as key hires, we have from time to time, provided discretionary matches beyond the typical match. The standard matching percentage for fiscal years 2004, 2005 and 2006 was primarily 18%. Compensation expense associated with these stock matches, which is included in both cost of net service revenues and general and administrative expenses under GAAP, is segregated because it is considered a function of the level of stock purchased by employees and not a cost of work performed.

        Because it is difficult to predict with any precision the amount of stock that will be purchased by employees, our stock match expense can vary significantly from period to period and tends to be a function of the level of our mergers and acquisitions activity. We anticipate once there is a public market for our stock, to reduce the overall matches to employees, including those obtained through mergers and acquisitions. As discussed above in "Components of Income and Expense," management believes that segregating stock matches is appropriate in analyzing results of operations. Stock matches are non-GAAP measures and segregating them from compensation expense included in cost of revenues and general and administrative expenses may not provide an accurate comparison to similarly titled captions reported by other companies.

        Equity in earnings of joint ventures includes our portion of fees added by joint ventures in which we participate in client billings for services performed by joint venture partners and earnings from investments in non-controlled and non-consolidated joint ventures where the joint venture employs its own employees.

        General and administrative expenses include all corporate overhead expenses, including personnel, occupancy, administrative, performance earnings plan accruals, taxes, benefits and other operating

26


expenses, and prior to fiscal 2002, amortization expense of goodwill acquired through acquisitions. In fiscal 2002, we discontinued amortizing goodwill and commenced testing our goodwill for impairment in accordance with Financial Accounting Standards Board, or FASB, Statement of Financial Accounting Standards, or SFAS, No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). To date, we have not recognized, nor do we expect to recognize in the future, any expense related to goodwill impairment. Should we determine, however, that our goodwill is impaired the related expense would be a component of our general and administrative expense.

        Included in our general and administrative expense is amortization expense of acquired intangible assets. Under SFAS No. 141, "Business Combinations" (SFAS 141) and the SEC's interpretations thereof, we must ascribe value to identifiable intangible assets other than goodwill in our purchase allocations for acquired companies. These assets include but are not limited to backlog, customer lists and trade names. To the extent we ascribe value to identifiable intangible assets that have finite lives, we amortize those values over the estimated useful lives of the assets. Such amortization expense, although non-cash in the period expensed, directly impacts our results of operations.

        It is difficult to predict with any precision the amount of expense we may record relating to acquired intangible assets. As backlog is typically the shortest lived intangible asset in our business, we would expect to see higher amortization expense in the first 12 to 18 months after a merger or acquisition has been consummated. Amortization expense of acquired intangible assets is a non-GAAP measures and segregating them from general and administrative expense may not provide an accurate comparison to similarly titled captions reported by other companies. In order to assess true operational performance, we segregate from general and administrative expense, as well as income from operations, the periodic amortization expense related to acquired intangible assets. These changes would have the effect of showing income from operations higher than it would have been under GAAP in actual dollars, as well as a percent of total revenue.

        Income tax expense varies as a function of income before income tax expense and permanent non-tax deductible expenses such as amortization expense of acquired intangible assets, certain amounts of meals and entertainment expense, valuation allowance requirements and other permanent differences. We anticipate to continue our merger and acquisition strategy and as such, we anticipate that there will be variability in our effective tax rate from quarter to quarter and year to year, especially to the extent that our permanent differences increase or decrease.

Mergers and Acquisitions

        One of our key strategies is to focus on both organic growth and mergers and acquisitions of technical companies that complement our business sectors and/or expand our geographic presence.

        In fiscal year 2004, we consummated the following two acquisitions:

27


        In fiscal year 2005, we consummated seven mergers and acquisitions, including:

        In fiscal year 2006, we consummated four mergers and acquisitions, including:

        In fiscal year 2007, we consummated five mergers and acquisitions, including:

        The purchase prices in certain of these mergers and acquisitions are subject to purchase allocation adjustments based upon the final determination of the acquired firm's tangible and intangible net asset values as of their respective closing dates. All of our mergers and acquisitions have been accounted for as purchases and the results of operations of the acquired companies have been included in our consolidated results since the dates of the merger and/or acquisition.

Critical Accounting Policies

        Our financial statements are presented in accordance with GAAP. Highlighted below are the accounting policies that management considers significant to understanding the operations of our business.

        Contract revenues are recognized on the percentage-of-completion method, measured generally by the ratio of direct labor dollars incurred to date to the total estimated direct labor dollars at completion. We include other direct costs (for example, third party field labor, subcontractors, or the procurement of materials or equipment) in contract revenues when the costs of these items are incurred and we are responsible for the ultimate acceptability of such costs. We consider the percentage-of-completion method to be the best available measure of progress on these contracts. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to estimated costs and revenues and are recognized in the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

        In the ordinary course of business, and at a minimum on a quarterly basis, we prepare updated estimates of the total forecasted contract revenue, cost and profit or loss. The cumulative effect of

28



revisions in estimates of the total forecasted revenue and costs during the course of the work, including unapproved change orders and claims, is reflected in the accounting period in which the facts that caused the revision become known to us. The financial impact of these revisions to any one contract is a function of both the amount of the revision and the percentage of completion of the contract.

        Claims are amounts in excess of the agreed contract price (or amounts not included in the original contract price) that we seek to collect from customers or others for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price or other causes of unanticipated additional costs. We record claims in accordance with paragraph 65 of the American Institute of Certified Public Accountants Statement of Position 81-1, "Accounting for Performance of Construction-Type and Certain Production-Type Contracts." This statement of position provides that recognition of amounts related to claims as additional contract revenue is appropriate only if it is probable that the claims will result in additional contract revenue and if the amount can be reliably estimated. Those two requirements are satisfied by management's determination of the existence of all of the following conditions: the contract or other evidence provides a legal basis for the claim; additional costs are caused by circumstances that were unforeseen at the contract date and are not the result of deficiencies in the contractor's performance; costs associated with the claim are identifiable or otherwise determinable and are reasonable in view of the work performed; and the evidence supporting the claim is objective and verifiable. If such requirements are met, revenue from a claim is recorded to the extent that contract costs relating to the claim have been incurred. The amounts recorded, if material, are disclosed in the notes to the financial statements. Costs attributable to claims are treated as costs of contract performance as incurred.

        Unbilled accounts receivable represents the excess of contract costs and profits (or contract revenue) recognized to date using the percentage-of-completion accounting method over billings to date. Unbilled work results when:


        Billings in excess of costs on uncompleted contracts represent the excess of billings to date, as allowed under the terms of a contract, over the amount of contract costs and profits (or contract revenue) recognized to date using the percentage-of-completion accounting method on certain contracts.

        We establish arrangements with other service providers to provide architecture, engineering, program management, construction management and operations and maintenance services through joint ventures. These joint ventures, the combination of two or more partners, are generally formed for a specific project. Management of the joint venture is controlled by the joint venture executive committee which is typically comprised of a representative of each joint venture partner with equal voting rights, irrespective of the ownership percentage, which is generally based on the percentage split of work to be performed by each joint venture partner. The executive committee provides management oversight and assigns work efforts to the joint venture partners. In accordance with the FASB Interpretation No. 46 (revised December 2003) "Consolidation of Variable Interest Entities" (FIN 46R)

29


joint ventures in which we are not the primary beneficiary are accounted for using the equity method. Services performed by us and billed to the joint ventures with respect to work done by us for third party customers are recorded as our revenues in the period such services are rendered. In certain joint ventures, a fee is added to the respective billings from us and the other joint venture partners on the amounts billed to third party customers. These fees result in earnings to the joint venture and are split with each of the joint venture partners and paid to the joint venture partners upon collection from the third party customer. We record our allocated share of these fees as equity in earnings of joint ventures.

        Under these arrangements, if one partner is financially unable to complete its share of the contract, the other partners will be required to complete those activities. Our policy is to enter into joint venture arrangements with partners who are financially sound and who carry appropriate levels of surety bonds for a project to adequately assure completion of their assignment. We have from time to time deviated from this policy at the request of our clients. In all instances, we attempt to structure our operating agreements among the joint venture partners to minimize risk.

        Valuation Allowance.    Deferred income taxes are provided on the liability method whereby deferred tax assets and liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities, as well as operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

        Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets may not be realized. Whether a deferred tax asset may be realized requires considerable judgment by us. In considering the need for a valuation allowance, we consider the future reversal of existing temporary differences, future taxable income exclusive of reversing temporary differences and carry-forwards, taxable income in carry-back years if carry-back is permitted under tax law, and prudent and feasible tax planning strategies that would not normally be taken by management, in the absence of the desire to realize the deferred tax asset. Whether a deferred tax asset will ultimately be realized is also dependent on varying factors, including, but not limited to, changes in tax laws and audits by tax jurisdictions in which we operate.

        We review the need for a valuation allowance annually. If we determine we will not realize all or part of our net deferred tax asset in the future, we will record an additional valuation allowance. Conversely, if we determine that the ultimate realizability of all or part of the net deferred tax asset is more likely than not to be realized, then the amount of the valuation allowance will be reduced. This adjustment will increase or decrease income tax expense in the period of such determination.

        Undistributed Foreign Earnings.    The results of foreign operations are consolidated by us for financial reporting; however, earnings from investments in foreign operations are included in domestic taxable income only when actually or constructively received. No deferred taxes have been provided on the undistributed earnings of foreign operations of approximately $71.8 million because we plan to permanently reinvest these earnings overseas. If we were to repatriate these earnings additional taxes would be due at that time. However, these additional taxes may be offset in part by the use of foreign tax credits.

        At September 30, 2006, we had recorded goodwill in the amount of approximately $466.5 million. SFAS 142 requires that we test our goodwill, at least annually, for potential impairment. The process of testing goodwill for impairment involves the determination of the fair value of our reporting units. Inherent in such fair value determinations are certain judgments and estimates, including assumptions

30


about our strategic plans with regard to our operations as well as the interpretation of current economic indicators and market valuations. To the extent economic conditions that would impact the future operations of our reporting units change, our goodwill may be deemed to be impaired and an impairment charge could result in a material adverse effect on our financial position or results of operations.

        We carry professional liability insurance policies or self-insure for our initial layer of professional liability claims under our professional liability insurance policies and for a deductible for each claim even after exceeding the self-insured retention. We accrue for our portion of the estimated ultimate liability for the estimated potential incurred losses. We establish our estimate of loss for each potential claim in consultation with legal counsel handling the specific matters and on historic trends taking into account recent events. We also use an outside actuarial firm to assist us in estimating our future claims exposure. It is possible that our estimate of loss may be revised based on the actual or revised estimate of liability of the claims.

Results of Operations

 
  Three Months Ended
  Change
 
 
  December 31,
2005

  December 31,
2006

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 746,797   $ 938,549   $ 191,752   25.7 %
Other direct costs     331,449     435,417     103,968   31.4  
   
 
 
     
Net service revenues     415,348     503,132     87,784   21.1  
Cost of net service revenues     215,309     254,713     39,404   18.3  
   
 
 
     
Gross profit     200,039     248,419     48,380   24.2  
Equity in earnings of joint ventures     1,670     1,417     (253 ) (15.1 )
General and administrative expenses     176,983     219,828     42,845   24.2  
   
 
 
     
Income from operations     24,726     30,008     5,282   21.4  
Minority interest in share of earnings     1,951     1,586     (365 ) (18.7 )
Gain on sale of equity investment         11,286     11,286    
Interest expense—net     3,723     1,075     (2,648 ) (71.1 )
   
 
 
     
Income before income tax expense     19,052     38,633     19,581   102.8  
Income tax expense     6,097     13,113     7,016   115.1  
   
 
 
     
Net income   $ 12,955   $ 25,520   $ 12,565   97.0 %
   
 
 
     

31


        The following table presents the percentage relationship of certain items to net service revenues:

 
  Three Months Ended
 
 
  December 31,
2005

  December 31,
2006

 
Net service revenues   100.0 % 100.0 %
Cost of net service revenues   51.8   50.6  
   
 
 
Gross profit   48.2   49.4  
Equity in earnings of joint ventures   0.4   0.3  
General and administrative expenses   42.6   43.7  
   
 
 
Income from operations   6.0   6.0  
Minority interest in share of earnings   0.5   0.3  
Gain on sale of equity investment   0.0   2.2  
Interest expense—net   0.9   0.2  
   
 
 
Income before income tax expense   4.6   7.7  
Income tax expense   1.5   2.6  
   
 
 
Net income   3.1 % 5.1 %
   
 
 

        For the three months ended December 31, 2006, revenues increased $191.8 million, or 25.7%, to $938.5 million as compared to $746.8 million for the three months ended December 31, 2005. Of this increase, $50.8 million, or 26.5% was provided by companies acquired in the past twelve months. Excluding revenues provided by companies acquired in the past 12 months, revenues increased $141.0 million, or 18.9%. This increase was primarily attributable to continued economic growth in Australia and Canada including increased government and private sector spending in infrastructure development; growth in our building and transportation business in the U.K. and significant growth in our combat support and global maintenance and supply services for the Department of Defense.

        For the three months ended December 31, 2006, net service revenues increased $87.8 million, or 21.1%, to $503.1 million as compared to $415.3 million for the three months ended December 31, 2005. Of this increase, $37.5 million, or 42.7% was provided by companies acquired in the past twelve months. Excluding net service revenues provided by companies acquired in the past 12 months, net service revenues increased $50.3 million, or 12.1%. This increase was primarily attributable to continued economic growth factors noted above and increases in our self-performed work for the above mentioned combat support and global maintenance and supply services for the Department of Defense.

        For the three months ended December 31, 2006, cost of net service revenues increased $39.4 million, or 18.3%, to $254.7 million as compared to $215.3 million for the three months ended December 31, 2005. Of this increase, $18.8 million, or 47.8% was incurred by companies acquired in the past 12 months. Excluding cost of net service revenues associated with companies acquired in the past twelve months, cost of net service revenues increased $20.6 million, or 9.6%. The preponderance of our cost of net service revenues is employee and employee related costs. As we realize increases in our net service revenues, we will realize corresponding increases in our headcount and employee and employee related costs. To the extent we increase our billable hours without increasing our headcount, our margins improve. For the three months ended December 31, 2006, cost of net service revenues, as

32


a percentage of net services revenues, were 50.6% as compared to 51.8% for the three months ended December 31, 2005.

        For the three months ended December 31, 2006, gross profit increased $48.4 million, or 24.2%, to $248.4 million as compared to $200.0 million for the three months ended December 31, 2005. Of this increase, gross profit provided by companies acquired in the past 12 months was $18.6 million, or 38.5%. Excluding gross profit provided by companies acquired in the past 12 months, gross profit increased $29.8 million, or 14.9%. This increase was primarily attributable to higher gross profit margins in our environmental compliance projects as well as higher margins in certain combat support and global maintenance and supply services. For the three months ended December 31, 2006, gross profit, as a percentage of net service revenues, was 49.4% as compared to 48.2% for the three months ended December 31, 2005.

        For the three months ended December 31, 2006, equity in earnings of joint ventures decreased $0.3 million, or 15.1%, to $1.4 million as compared to $1.7 million for the three months ended December 31, 2005 resulting from lower activities in non-consolidated/non-controlled joint ventures.

        For the three months ended December 31, 2006, general and administrative expenses increased $42.8 million, or 24.2%, to $219.8 million as compared to $177.0 million for the three months ended December 31, 2005. For the three months ended December 31, 2006, general and administrative expenses, as a percentage of net service revenues, were 43.7% as compared to 42.6% for the three months ended December 31, 2005. The increase was primarily attributable to growth in revenues noted above, increased headcount associated with acquired companies, continued investments throughout the organization to support strategic initiatives and expenses incurred related to our becoming a public reporting company, including Sarbanes-Oxley Act of 2002 (SOX) compliance efforts partially offset by a decrease of $2.5 million in amortization expense of acquired intangible assets.

        In the three months ended December 31, 2006, we sold our minority interest in an equity investment in the U.K. for 7.5 million GBP, or approximately $14.7 million. Related to this sale, we recorded a gain on the sale of $11.3 million.

        For the three months ended December 31, 2006, net interest expense decreased $2.6 million, or 71.1%, to $1.1 million as compared to $3.7 million for the three months ended December 31, 2005. This decrease was primarily attributable to lower borrowings in the three months ended December 31, 2006 as compared to the prior year. In three months ended December 31, 2005, we had higher borrowings under our senior credit facility associated with acquisitions completed in the latter part of fiscal year 2005 and the first quarter of fiscal year 2006.

        For the three months ended December 31, 2006, income tax expense increased $7.0 million, or 115.1%, to $13.1 million as compared to $6.1 million for the three months ended December 31, 2005. The effective tax rate for the three months ending December 31, 2006 was 33.9% as compared to 32.0% for the three months ended December 31, 2005.

33


        The factors described above resulted in net income of $25.5 million for the three months ended December 31, 2006 as compared to net income of $13.0 for the three months ended December 31, 2005.

Results of Operations by Reportable Segment:

Professional Technical Services

 
  Three Months Ended
   
   
 
 
  Change
 
 
  December 31, 2005
  December 31, 2006
 
 
  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 612,264   $ 753,545   $ 141,281   23.1 %

Net service revenues

 

$

399,599

 

$

482,781

 

$

83,182

 

20.8

%
Cost of net service revenues     207,468     242,745     35,277   17.0 %
   
 
 
 
 
Gross profit   $ 192,131   $ 240,036   $ 47,905   24.9 %
   
 
 
 
 

        The following table presents the percentage relationship of certain items to net service revenue:

 
  Three Months Ended
 
 
  December 31,
2005

  December 31,
2006

 
Net service revenues   100.0 % 100.0 %
Cost of net service revenues   51.9   50.3  
   
 
 
Gross profit   48.1 % 49.7 %
   
 
 

        For the three months ended December 31, 2006, revenues for our PTS segment increased $141.3 million, or 23.1%, to $753.5 million as compared to $612.3 million for the three months ended December 31, 2005. Of this increase, $50.8 million, or 35.9% was provided by companies acquired in the past twelve months. Excluding revenues provided by companies acquired in the past 12 months, revenues for our PTS segment increased $90.5 million, or 14.8%. This increase was primarily attributable to continued economic growth in Australia and Canada including increased government and private sector spending in infrastructure development and growth in our building and transportation business in the U.K.

        For the three months ended December 31, 2006, net service revenues for our PTS segment increased $83.2 million, or 20.8%, to $482.8 million as compared to $399.6 million for the three months ended December 31, 2005. Of this increase, $37.4 million, or 45.0% was provided by companies acquired in the past twelve months. Excluding net service revenues provided by companies acquired in the past 12 months, net service revenues for our PTS segment increased $45.7 million, or 11.4%. This increase was primarily attributable to the factors mentioned above.

        For the three months ended December 31, 2006, cost of net service revenues for our PTS segment increased $35.3 million, or 17.0%, to $242.7 million as compared to $207.5 million in the three months ended December 31, 2005. Of this increase, $18.8 million, or 53.3% was incurred by companies

34


acquired in the past twelve months. Excluding cost of net service revenues incurred by companies acquired in the past twelve months, cost of net service revenues increased by $16.5 million, or 7.9%. This lower rate of growth as compared to net service revenues was primarily attributable to higher margins of acquired companies, in particular those with an environmental management practice and margin improvement in our Canadian and U.K. operations. For the three months ended December 31, 2006, cost of net service revenues, as a percentage of net service revenues, were 50.3% as compared to 51.9% for the three months ended December 31, 2005.

        For the three months ended December 31, 2006, gross profit for our PTS segment increased $47.9 million, or 24.9%, to $240.0 million as compared to $192.1 million for the three months ended December 31, 2005. Of this increase, $18.6 million, or 38.8% was provided by companies acquired in the past 12 months. Excluding gross profit provided by companies acquired in the past 12 months, gross profit increased $29.3 million, or 15.2%. The increases were primarily attributable to success fees associated with a project in Australia, margin improvements in our Canadian and U.K. operations as well as our U.S. transportation sector. For the three months ended December 31, 2006, gross profit, as a percentage of net service revenues, was 49.7% as compared to 48.1% for the three months ended December 31, 2005.

        For the three months ended December 31, 2006, equity in earnings of joint ventures for our PTS segment decreased $0.4 million, or 47.5%, to $0.4 million as compared to $0.8 million for the three months ended December 31, 2005.

 
  Three Months Ended
  Change
 
 
  December 31,
2005

  December 31,
2006

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 134,479   $ 184,680   $ 50,201   37.3 %

Net service revenues

 

$

13,574

 

$

20,086

 

$

6,512

 

48.0

%
Cost of net service revenues     6,954     11,969     5,015   72.1 %
   
 
 
     
Gross profit   $ 6,620   $ 8,117   $ 1,497   22.6 %
   
 
 
     

        The following table presents the percentage relationship of certain items to net service revenue:

 
  Three Months Ended
 
 
  December 31,
2005

  December 31,
2006

 
Net service revenues   100.0 % 100.0 %
Cost of net service revenues   51.2   59.6  
   
 
 
Gross profit   48.8 % 40.4 %
   
 
 

35


        For the three months ended December 31, 2006, revenues for our MSS segment increased $50.2 million, or 37.3%, to $184.7 million as compared to $134.5 million for the three months ended December 31, 2005, none of which was provided by companies acquired in the past 12 months. This increase was primarily attributable to significant growth in our self-performed work for combat support and global maintenance and supply services for the Department of Defense, offset by lower levels of other direct costs.

        For the three months ended December 31, 2006, net service revenues for our MSS segment increased $6.5 million, or 48.0%, to $20.1 million as compared to $13.6 million for the three months ended December 31, 2005. The remaining increase was primarily attributable to growth in our self-performed work for the above mentioned combat support and global maintenance and supply services for the Department of Defense.

        For the three months ended December 31, 2006, cost of net service revenues for our MSS segment increased $5.0 million, or 72.1%, to $12.0 million as compared to $7.0 million for the three months ended December 31, 2005. For the three months ended December 31, 2006, cost of net service revenues, as a percentage of net service revenues, were 59.6% as compared to 51.2% for the three months ended December 31, 2005.

        For the three months ended December 31, 2006, gross profit for our MSS segment increased $1.5 million, or 22.6%, to $8.1 million as compared to $6.6 million for the three months ended December 31, 2005. For the three months ended December 31, 2006, gross profit, as a percentage of net service revenues, was 40.4% as compared to 48.8% for the three months ended December 31, 2005. However, for the three months ended December 31, 2006, gross profit, as a percentage of revenues, was 4.4% as compared to 4.9% for the three months ended December 31, 2005. This decrease was primarily attributable to the completion of a higher margin project in the 2005 time period.

        For the three months ended December 31, 2006, equity in earnings of joint ventures for our MSS segment increased $1.3 million, or 144.4%, to $2.2 million as compared to $0.9 million for the three months ended December 31, 2005 primarily due to our participation in the Nevada Test Site project. Equity in earnings of joint ventures varies from period to period based upon the services performed for non-controlled and non-consolidated joint ventures.

36


Fiscal year ended September 30, 2006 compared to the fiscal year ended September 30, 2005

 
  Fiscal Year Ended
  Change
 
 
  September 30,
2005

  September 30,
2006

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 2,395,340   $ 3,421,492   $ 1,026,152   42.8 %
Other direct costs     932,797     1,521,775     588,978   63.1  
   
 
 
     
Net service revenues     1,462,543     1,899,717     437,174   29.9  
Cost of net service revenues     785,066     993,909     208,843   26.6  
   
 
 
     
Gross profit     677,477     905,808     228,331   33.7  
Equity in earnings of joint ventures     2,352     6,554     4,202   178.7  
General and administrative expenses     581,529     808,953     227,424   39.1  
   
 
 
     
Income from operations     98,300     103,409     5,109   5.2  
Minority interest in share of earnings     8,453     13,924     5,471   64.7  
Interest expense—net     7,054     10,576     3,522   49.9  
   
 
 
     
Income before income tax expense     82,793     78,909     (3,884 ) (4.7 )
Income tax expense     28,979     25,223     (3,756 ) (13.0 )
   
 
 
     
Net income   $ 53,814   $ 53,686   $ (128 ) (0.2 )%
   
 
 
     

        The following table presents the percentage relationship of certain items to net service revenues:

 
  Fiscal Year Ended
 
 
  September 30,
2005

  September 30,
2006

 
Net service revenues   100.0 % 100.0 %
Cost of net service revenues   53.7   52.3  
   
 
 
Gross profit   46.3   47.7  
Equity in earnings of joint ventures   0.2   0.3  
General and administrative expenses   39.8   42.6  
   
 
 
Income from operations   6.7   5.4  
Minority interest in share of earnings   0.5   0.6  
Interest expense—net   0.5   0.6  
   
 
 
Income before income tax expense   5.7   4.2  
Income tax expense   2.0   1.4  
   
 
 
Net income   3.7 % 2.8 %
   
 
 

        For fiscal 2006, revenues were $3.4 billion, an increase of $1.0 billion, or 42.8%, over fiscal 2005. Of this increase, $414.4 million was provided by companies acquired in the past 12 months. Excluding revenues provided by companies acquired in the past 12 months, revenues increased $611.8 million, or 25.5% over fiscal 2005. Revenues increased among most of our sectors and geographic markets. In particular, there was strong growth in our MSS segment due to increased revenues in several existing and new contract awards.

37


        For fiscal 2006, net service revenues were $1.9 billion, an increase of $437.2 million, or 29.9%, over fiscal 2005. Of this increase, $281.9 million was provided by companies acquired in the past 12 months. Excluding net service revenues provided by companies acquired in the past 12 months, net service revenues increased $155.3 million, or 10.6% over fiscal 2005. The difference between the growth rates of our revenues and net services revenues is primarily attributable to the level of subcontracted costs and other direct costs which can vary significantly from period to period depending on contract requirements and contract mix. In addition, as we realize variations in our billable hours or utilization rates, net service revenues will vary.

        For fiscal 2006, cost of net service revenues was $993.9 million, an increase of $208.8 million, or 26.6%, over fiscal 2005. Of this increase, $128.2 million was incurred by companies acquired in the past 12 months. Excluding cost of net service revenues incurred by companies acquired in the past 12 months, cost of net service revenues increased $80.6 million, or 10.3% over fiscal 2005. The cost of net service revenues across our business segments was generally in line with the changes in net service revenues for our business segments.

        Gross profit was $905.8 million in fiscal 2006, an increase of $228.3 million, or 33.7% over fiscal 2005. Of this increase, $153.7 was provided by companies acquired in the past 12 months. Excluding gross profit provided by companies acquired in the past 12 months, gross profit increased $74.6 million, or 11.0% over fiscal 2005. As a percentage of net service revenue, gross profit was 46.3% and 47.7% in fiscal 2005 and 2006, respectively. The increase in fiscal 2006 was primarily attributable to higher margins that were added through mergers and acquisitions in the past year in addition to margin improvements in our foreign operations.

        Equity in earnings of joint ventures was $6.5 million in fiscal 2006, an increase of $4.2 million over fiscal 2005 resulting from growth in our joint venture activities.

        General and administrative expenses were $809.0 million in fiscal 2006, up $227.4 million, or 39.1%, over fiscal 2005. As a percentage of net service revenues, general and administrative expenses increased from 39.8% in fiscal 2005 to 42.6% in fiscal 2006.

        Included in general and administrative expense is amortization expense of acquired intangible assets. This amortization expense was $14.5 million in fiscal 2006, up $11.5 million, or 383.3%, over fiscal 2005 as a result of recent mergers and acquisitions. This expense will vary as we consummate mergers and acquisitions, however, we expect the amortization expense to be higher during the first 12 to 18 months following the acquisition due to the short-term nature of acquired backlog.

        Also included in general and administrative expense is approximately $4.0 million in expense incurred related to our becoming a public reporting company, including our SOX compliance efforts. We expect to continue to incur material levels of expense for our SOX compliance efforts through fiscal 2007 and 2008.

        This overall increase in our general and administrative expense was largely the result of increased personnel, including personnel associated with acquired companies, the factors described above,

38



increased costs to support growth and compliance efforts, as well as one-time expenses related to recent mergers and acquisitions of $5.5 million.

        An overall increase in our business activity, higher gross profit, offset by higher general and administrative expenses, resulted in income from operations of $103.4 million in fiscal 2006, an increase of $5.1 million, or 5.2%, from $98.3 million in fiscal 2005.

        Interest expense, net of $3.5 million of interest income, increased to $10.6 million in fiscal 2006, compared to $7.1 million in fiscal 2005. This increase is primarily attributable to higher average borrowings throughout the year to fund mergers and acquisitions, partially offset by strong cash flow from operations, $128.4 million in excess proceeds from the $235.0 million sale of our Class F and Class G convertible stock and a $1.1 million gain on the termination of our interest-rate swap contracts. At September 30, 2006, borrowings under our Amended and Restated Credit Agreement, our Term Credit Agreement and senior notes outstanding totaled $133.8 million, as compared to $229.7 million at September 30, 2005.

        Income tax expense was $25.2 million in fiscal 2006, compared to $29.0 million in fiscal 2005. The effective tax rate was 32.0% in fiscal 2006, as compared to 35.0% in fiscal 2005. The decrease in the effective tax rate was primarily attributable to the favorable resolution of certain contingencies relating to audits that were unresolved at September 30, 2005.

        The factors described above resulted in net income of $53.7 million in fiscal 2006, as compared to net income of $53.8 million in fiscal 2005.

Results of Operations by Reportable Segment

Professional Technical Services

 
  Fiscal Year Ended
  Change
 
 
  September 30,
2005

  September 30,
2006

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 2,082,618   $ 2,772,833   $ 690,215   33.1 %

Net service revenues

 

$

1,415,450

 

$

1,787,078

 

$

371,628

 

26.3

%
Cost of net service revenues     753,231     914,773     161,542   21.4 %
   
 
 
     
Gross profit   $ 662,219   $ 872,305   $ 210,086   31.7 %
   
 
 
     

39


        The following table presents the percentage relationship of certain items to revenue, net of subcontractor costs:

 
  Fiscal Year Ended
 
 
  September 30,
2005

  September 30,
2006

 
Net service revenues   100.0 % 100.0 %
Cost of net service revenues   53.2   51.2  
   
 
 
Gross profit   46.8 % 48.8 %
   
 
 

        Revenues for our PTS segment were $2.8 billion in fiscal 2006, an increase of $690.2 million, or 33.1%, over fiscal 2005. Of this increase, $414.4 million was provided by companies acquired in the past 12 months. Excluding revenues provided by companies acquired in the past 12 months, revenues increased $275.8 million, or 13.2% over fiscal 2005. PTS experienced growth throughout most of its business areas, with the exception of U.S. transportation operations due to temporary delays on certain large transportation projects.

        Net service revenues for our PTS segment were $1.8 billion in fiscal 2006, an increase of $371.6 million, or 26.3%, over fiscal 2005. Of this increase, $281.9 million was provided by companies acquired in the past 12 months. Excluding net service revenues provided by companies acquired in the past 12 months, net service revenues increased $89.7 million, or 6.3%, over fiscal 2005. Net service revenues increased at a lower rate as compared to gross revenues due to higher pass-through costs to subcontractors included in total revenues.

        The cost of net service revenues for our PTS segment was $914.8 million in fiscal 2006, an increase of $161.5 million, or 21.4%, over fiscal 2005. Of this increase, $128.2 million was incurred by companies acquired in the past 12 months. Excluding cost of net service revenues incurred by companies acquired in the past 12 months, cost of net service revenues increased $33.3 million, or 4.4%.

        Gross profit for our PTS segment was $872.3 million in fiscal 2006, an increase of $210.1 million, or 31.7% over fiscal 2005. Of this increase, $153.7 million was provided by companies acquired in the past 12 months. Excluding gross profit provided by companies acquired in the past 12 months, gross profit increased $56.4 million, or 8.5%. As a percentage of net service revenue, gross profit was 48.8% of net service revenue in fiscal 2006, as compared to 46.8% in fiscal 2005. These changes were attributable to the factors described above.

        Equity in earnings of joint ventures for our PTS segment was $3.0 million in fiscal 2006, an increase of $0.6 million over fiscal 2005.

40


Management Support Services

 
  Fiscal Year Ended
  Change
 
 
  September 30,
2004

  September 30,
2005

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 309,053   $ 647,188   $ 338,135   109.4 %

Net service revenues

 

$

42,977

 

$

89,794

 

$

46,817

 

108.9

%
Cost of net service revenues     29,010     50,921     21,911   75.5 %
   
 
 
     
Gross profit   $ 13,967   $ 38,873   $ 24,906   178.3 %
   
 
 
     

        The following table presents the percentage relationship of certain items to revenue, net of subcontractor costs:

 
  Fiscal Year Ended
 
 
  September 30,
2004

  September 30,
2005

 
Net service revenues   100.0 % 100.0 %
Cost of net service revenues   67.5   56.7  
   
 
 
Gross profit   32.5 % 43.3 %
   
 
 

        Revenues for our MSS segment were $647.2 million in fiscal 2006, an increase of $338.1 million, or 109.4%, over fiscal 2005, none of which was provided by companies acquired in the past 12 months. The increase in revenues was primarily attributable to the continuing military activities in the Middle East, resulting in demand for maintenance and operations of installations as well as modification work on military vehicles and systems. We also realized a substantial increase in the value of our indefinite delivery/indefinite quantity contracts. The nature of our work task orders focus on establishing facilities, general support and maintenance for U.S. military pre-positioned stocks, logistics, equipment and fleet management.

        Net service revenues for our MSS segment were $89.8 million in fiscal 2006, an increase of $46.8 million, or 108.9% over fiscal 2005. Net service revenues increased at a slower rate than gross revenues due to a higher amount of pass-through costs that are included in gross revenues.

        The cost of net service revenues for our MSS segment was $50.9 million in fiscal 2006, an increase of $21.9 million, or 75.5% over fiscal 2005. This increase was due to higher indirect expenses associated with the increase in business volume and employee-related expenses.

        Gross profit for our MSS segment was $38.9 million in fiscal 2006, an increase of $24.9 million, or 178.3% over fiscal 2005. As a percentage of net service revenue, gross profit was 43.3% in fiscal 2006 as compared to 32.5% in fiscal 2005.

41


        Equity in earnings of joint ventures for our MSS segment was $4.9 million in fiscal 2006, an increase of $4.9 million over fiscal 2005. The increase was primarily attributable to earnings from recently formed unconsolidated joint ventures. Due to our minority interest in this joint venture, the earnings are not reflected in revenues for our MSS segment. The joint ventures provide peacekeeping services, administrative support for civilian agencies and response training for law enforcement and military personnel. In addition, the award of the management and operations contract of the U.S. government's Nevada Test Site to the limited liability company for which we serve as a key partner provided earnings contribution through contract award fee performance.

 
  Fiscal Year Ended
  Change
 
 
  September 30,
2004

  September 30,
2005

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 2,011,975   $ 2,395,340   $ 383,365   19.1 %
Other direct costs     775,722     932,797     157,075   20.2  
   
 
 
     
Net service revenues     1,236,253     1,462,543     226,290   18.3  
Cost of net service revenues     667,697     785,066     117,369   17.6  
   
 
 
     
Gross profit     568,556     677,477     108,921   19.2  
Equity in earnings of joint ventures     2,517     2,352     (165 ) (6.6 )
General and administrative expenses     484,446     581,529     97,083   20.0  
   
 
 
     
Income from operations     86,627     98,300     11,673   13.5  
Minority interest in share of earnings     3,239     8,453     5,214   161.0  
Interest expense—net     6,968     7,054     86   1.2  
   
 
 
     
Income before income tax expense     76,420     82,793     6,373   8.3  
Income tax expense     25,984     28,979     2,995   11.5  
   
 
 
     
Net income   $ 50,436   $ 53,814   $ 3,378   6.7 %
   
 
 
     

        The following table presents the percentage relationship of certain items to net service revenues:

 
  Fiscal Year Ended
   
   
 
  September 30,
2004

  September 30,
2005

   
   
Net service revenues   100.0 % 100.0 %      
Cost of net service revenues   54.0   53.7        
   
 
       
Gross profit   46.0   46.3        
Equity in earnings of joint ventures   0.2   0.2        
General and administrative expenses   39.2   39.8        
   
 
       
Income from operations   7.0   6.7        
Minority interest in share of earnings   0.2   0.5        
Interest expense—net   0.6   0.5        
   
 
       
Income before income tax expense   6.2   5.7        
Income tax expense   2.1   2.0        
   
 
       
Net income   4.1 % 3.7 %      
   
 
       

42


        For fiscal 2005, revenues were $2.4 billion, an increase of $383.4 million, or 19.1%, over fiscal 2004. Of this increase, $210.2 million was provided by companies acquired in the past 12 months. Excluding revenues provided by companies acquired in the past 12 months, revenues increased $173.2 million, or 8.6% over fiscal 2004.

        For fiscal 2005, net service revenues were $1.5 billion, an increase of $226.3 million, or 18.3%, over fiscal 2004. Of this increase, $147.6 million was provided by companies acquired in the past 12 months. Excluding net service revenues provided by companies acquired in the past 12 months, net service revenues increased $78.7 million, or 6.4% over fiscal 2004.

        The cost of net service revenues was $785.1 million in fiscal 2005, an increase of $117.4 million, or 17.6%, over fiscal 2004. Of this increase, $74.6 million was incurred by companies acquired in the past 12 months. Excluding cost of net service revenues incurred by companies acquired in the past 12 months, cost of net service revenues increased $42.8 million, or 6.4% over fiscal 2004. The cost of net service revenues across our business segments was generally in line with the changes in net service revenues for each business segment.

        Gross profit was $677.5 million in fiscal 2005, an increase of $108.9 million, or 19.2% over fiscal 2004. Of this increase, gross profit provided by companies acquired in the past 12 months was $73.0 million. Excluding gross profit provided by companies acquired in the past 12 months, gross profit increased $35.9 million, or 6.3% over fiscal 2004. As a percentage of net service revenue, gross profit was 46.0% and 46.3% in fiscal 2004 and 2005, respectively. The slight increase in fiscal 2005 was primarily attributable to improvements in margins in our operations outside of the U.S.

        Equity in earnings of joint ventures was $2.4 million in fiscal 2005, a decrease of $0.2 million over fiscal 2004.

        General and administrative expenses were $581.5 million in fiscal 2005, up $97.1 million, or 20.0%, over fiscal 2004. As a percentage of net service revenue, general and administrative expenses increased from 39.2% in fiscal 2004 to 39.8% in fiscal 2005.

        Included in general and administrative expense is amortization expense of acquired intangible assets. This amortization expense was $3.0 million in fiscal 2005 as compared to $0.0 million in fiscal 2004.

        Also included in general and administrative expense was increased expenditures for new corporate initiatives, including transition costs associated with implementing a company-wide enterprise resource planning (ERP) platform. Higher gross profit, offset by higher general and administrative expenses, resulted in income from operations of $98.3 million in fiscal 2005, an increase of $11.7 million, or 13.5%, from $86.6 million of income from operations in fiscal 2004.

43


        Interest expense, net of $2.1 million interest income, increased slightly to $7.1 million in fiscal 2005, compared to $7.0 million in fiscal 2004. Borrowings under our credit agreement and senior notes outstanding totaled $229.7 million at September 30, 2005 as compared to $108.3 million at September 30, 2004. The difference is primarily attributable to borrowings under our credit facility to finance an acquisition in September 2005.

        Income tax expense was $29.0 million in fiscal 2005, compared to $26.0 million in fiscal 2004. The effective tax rate was 32% both in fiscal 2005 and fiscal 2004.

        The factors described above resulted in net income of $53.8 million in fiscal 2005, compared to net income of $50.4 million in fiscal 2004.

 
  Fiscal Year Ended
  Change
 
 
  September 30,
2004

  September 30,
2005

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 1,777,718   $ 2,082,618   $ 304,900   17.2 %

Net service revenues

 

$

1,198,354

 

$

1,415,450

 

$

217,096

 

18.1

%
Cost of net service revenues     636,962     753,231     116,269   18.3 %
   
 
 
 
 
Gross profit   $ 561,392   $ 662,219   $ 100,827   18.0 %
   
 
 
 
 

        The following table presents the percentage relationship of certain items to revenue, net of subcontractor costs:

 
  Fiscal Year Ended
   
   
 
  September 30,
2004

  September 30,
2005

   
   
Net service revenues   100.0 % 100.0 %      
Cost of net service revenues   53.2   53.2        
   
 
       
Gross profit   46.8 % 46.8 %      
   
 
       

        Revenues for our PTS segment were $2.1 billion in fiscal 2005, an increase of $304.9 million, or 17.2%, over fiscal 2004. Of this increase, $210.2 million was provided by companies acquired in the past twelve months. Excluding revenues of companies acquired in the past 12 months, revenues for our PTS segment increased $94.7 million, or 5.3% over fiscal 2004. PTS experienced growth throughout most of its business areas, offset by decreases in state and local government spending due to continuing budget deficits.

44


        Net service revenues for our PTS segment was $1.4 billion in fiscal 2005, an increase of $217.1 million, or 18.1%, over fiscal 2004. Of this increase, $147.6 million was provided by companies acquired in the past 12 months. Excluding net service revenues of companies acquired in the past 12 months, net service revenues for our PTS segment increased $69.5 million, or 5.8% over fiscal 2004. Net service revenues increased at a higher rate as compared to gross revenues due to the inclusion of lower pass-through costs to subcontractors included in gross revenues.

        The cost of net service revenues for our PTS segment was $753.2 million in fiscal 2005, an increase of $116.3 million, or 18.3%, over fiscal 2004. Of this increase, $74.6 million was incurred by companies acquired in the past 12 months. Excluding cost of net service revenues from companies acquired in the past 12 months, cost of net service revenues for our PTS segment increased $41.7 million, or 6.5%, over fiscal 2004.

        Gross profit for our PTS segment was $662.2 million in fiscal 2005, an increase of $100.8 million, or 18.0% over fiscal 2004. Of this increase, $73.0 was provided by companies acquired in the past 12 months. Excluding gross profit provided by companies acquired in the past 12 months, gross profit for our PTS segment increased $27.8 million, or 5.0%, over fiscal 2004. As a percentage of net service revenue, gross profit was 46.8% in fiscal 2005 and fiscal 2004.

        Equity in earnings of joint ventures for our PTS segment was $2.4 million in fiscal 2005, a decrease of $0.2 million, or 6.6%, over fiscal 2004.

Management Support Services

 
  Fiscal Year Ended
  Change
 
 
  September 30,
2004

  September 30,
2005

  $
  %
 
 
  ($ in thousands)

 
Revenues   $ 232,143   $ 309,053   $ 76,910   33.1 %

Net service revenues

 

$

35,785

 

$

42,977

 

$

7,192

 

20.1

%
Cost of net service revenues     29,399     29,010     (389 ) (1.3 )%
   
 
 
 
 
Gross profit   $ 6,386   $ 13,967   $ 7,581   118.7 %
   
 
 
 
 

        The following table presents the percentage relationship of certain items to revenue, net of subcontractor costs:

 
  Fiscal Year Ended
   
   
 
  September 30,
2004

  September 30,
2005

   
   
Net service revenues   100.0 % 100.0 %      
Cost of net service revenues   82.2   67.5        
   
 
       
Gross profit   17.8 % 32.5 %      
   
 
       

45


        Revenues for our MSS segment were $309.1 million in fiscal 2005, an increase of $76.9 million, or 33.1%, over fiscal 2004, none of which was provided by companies acquired in the past 12 months. The increase in MSS revenues resulted from increased revenues in operations and maintenance services for the U.S. military that was associated with the continued high level of activities in the Middle East in addition to increased revenues from our U.S. installation operation services.

        Net service revenues for our MSS segment were $43.0 million in fiscal 2005, an increase of $7.2 million, or 20.1%, over fiscal 2004.

        The cost of net service revenues for our MSS segment was $29.0 million in fiscal 2005, a decrease of $0.4 million, or 1.3% over fiscal 2004. This decrease in costs was primarily attributable to an increase in higher margin contracts for support service. The support contracts generally carry higher margins than operation and maintenance and field-based services contracts.

        Gross profit for our MSS segment was $14.0 million in fiscal 2005, an increase of $7.6 million, or 118.7%, over fiscal 2004. As a percentage of net service revenue, gross profit was 32.5% in fiscal 2005 as compared to 17.8% in fiscal 2004.

Seasonality

        We experience seasonal trends in our business. Our revenues are typically lower in the first quarter of our fiscal year, primarily due to lower utilization rates attributable to holidays recognized around the world. Our revenues are typically higher in the last half of the year. Many U.S. state governments with fiscal years ending on June 30 tend to accelerate spending during their first quarter, when new funding becomes available. In addition, we find that the U.S Federal government tends to authorize more work during the period preceding the end of its fiscal year, September 30. Further, our construction management revenue typically increases during the high construction season of the summer months. For these reasons coupled with the number and significance of client contracts commenced and completed during a period as well as the time of expenses incurred for corporate initiatives, it is not unusual for us to experience seasonal changes or fluctuations in our quarterly operating results.

Quarterly Results of Operations

        The following table shows, for the periods indicated, unaudited selected quarterly financial data from our consolidated statements of income modified to display the effect of the non-GAAP measure net service revenues in which our management uses to analyze our results of operations (see "Components of Income and Expense" contained earlier in this discussion). We believe this data includes all adjustments, consisting only of normal recurring adjustments that are necessary for a fair presentation of the results of operations for these periods. The unaudited selected quarterly financial data below should be read in conjunction with our audited consolidated financial statements and

46



related notes included elsewhere in this prospectus. Our operating results in any one quarter are not necessarily indicative of the results that may be expected for any future period.

Fiscal Year 2006:

  First
Quarter

  Second
Quarter

  Third
Quarter

  Fourth
Quarter

 
  (in thousands)

Revenues   $ 746,797   $ 858,930   $ 911,486   $ 904,279
Other direct costs     331,450     369,089     417,057     404,179
   
 
 
 
Net service revenues     415,347     489,841     494,429     500,100
Cost of net service revenues     215,308     260,818     261,524     256,259
   
 
 
 
Gross profit     200,039     229,023     232,905     243,841
Equity in earnings of joint ventures     1,670     893     1,554     2,437
General and administrative expenses     176,983     204,838     209,340     217,792
   
 
 
 
Income from operations     24,726     25,078     25,119     28,486
Minority interest in share of earnings     1,951     3,530     3,022     5,421
Interest expense — net     3,723     4,067     2,528     258
   
 
 
 
Income before income tax expense     19,052     17,481     19,569     22,807
Income tax expense     6,097     5,594     6,262     7,270
   
 
 
 
Net income   $ 12,955   $ 11,887   $ 13,307   $ 15,537
   
 
 
 
Fiscal Year 2005:

  First
Quarter

  Second
Quarter

  Third
Quarter

  Fourth
Quarter

 
  (in thousands)

Revenues   $ 531,064   $ 579,507   $ 624,931   $ 659,838
Other direct costs     205,983     214,702     247,920     264,192
   
 
 
 
Net service revenues     325,081     364,805     377,011     395,646
Cost of net service revenues     175,315     197,532     203,515     208,704
   
 
 
 
Gross profit     149,766     167,273     173,496     186,942
Equity in earnings of joint ventures     763     223     130     1,236
General and administrative expenses     130,090     146,695     149,559     155,185
   
 
 
 
Income from operations     20,439     20,801     24,067     32,993
Minority interest in share of earnings     1,465     2,504     2,329     2,155
Interest expense — net     1,763     2,286     1,366     1,639
   
 
 
 
Income before income tax expense     17,211     16,011     20,372     29,199
Income tax expense     6,023     5,604     7,130     10,222
   
 
 
 
Net income   $ 11,188   $ 10,407   $ 13,242   $ 18,977
   
 
 
 

Liquidity and Capital Resources

        We have historically relied on cash flow from operations, proceeds from sales of stock (both to employees and to institutional investors) and borrowings under debt facilities to satisfy our working capital requirements as well as to fund share repurchases and mergers and acquisitions. In the future, we may need to raise additional funds through public and/or additional private debt or equity financings to take advantage of business opportunities, including existing business growth and mergers and acquisitions.

47


        At December 31, 2006, cash and cash equivalents was $137.8 million, an increase of $9.9 million, or 7.7%, from September 30, 2006. This increase was primarily attributable to higher cash balances held in consolidated joint ventures.

        Net cash provided by operating activities was $43.7 million for the three months ended December 31, 2006, an increase of $62.2 million from the net cash used in operating activities of $18.6 million for the three months ended December 31, 2005. The increase was primarily attributable to higher collections of accounts receivable in both of our operating segments, advanced billings to clients in our MSS operating segment and lower income tax payments.

        Net cash provided by operating activities was $121.3 million for the year ended September 30, 2006, an increase of $74.7 million from the net cash provided by operating activities of $46.6 million for the year ended September 30, 2005. The increase was primarily attributable to a more efficient use of working capital as well as higher earnings before non-cash expenses.

        Net cash used in investing activities was $4.6 million for the three months ended December 31, 2006, a decrease of $36.2 million from the net cash used in investing activities of $40.9 million in the three months ended December 31, 2005. For the three months ended December 31, 2006, net cash used in business combinations was $6.2 million as compared to $34.1 million used in business combinations for the comparable period last year, primarily a result of cash used to facilitate the EDAW merger.

        Net cash used in investing activities was $71.8 million for the year ended September 30, 2006, a decrease of $65.2 million from the net cash used in investing activities of $137.0 million in the year ended September 30, 2005. For the year ended September 30, 2006, net cash used in business combinations was $53.3 million as compared to $158.9 million used in business combinations for the prior fiscal year. We continue to invest in our initiative to re-design our business processes and to implement a global enterprise resource planning (ERP) system. In fiscal 2006, we capitalized $6.7 million in costs associated with our ERP system, as compared to $10.8 million in fiscal 2005. For the year ended September 30, 2006, proceeds from the sale of property and equipment totaled $21.3 million as compared to $0.8 million in the prior fiscal year. This increase was primarily related to the sale of an office building in Orange, California.

        Net cash used in financing activities was $29.8 million, for the three months ended December 31, 2006, a decrease of $102.6 million from cash provided by financing activities of $72.8 million in the comparable period last year, primarily as a result of lesser borrowings to facilitate mergers and acquisitions due to strong cash flow provided from operations.

        Net cash provided by financing activities was $23.8 million for the year ended September 30, 2006, as compared to net cash provided by financing activities of $84.1 million in the year ended September 30, 2005. In fiscal 2006, net cash provided by financing activities was largely the result of proceeds from the sale of our stock, notably the Class F and Class G convertible preferred stock, offset by the redemption of our Class D convertible preferred stock and related warrants and net repayments of borrowings under our credit agreements.

        Working capital, or current assets less current liabilities, decreased $23.2 million, or 11.5%, from $201.3 million at September 30, 2006 to $178.1 million at December 31, 2006 largely as a result of greater scheduled amortization of senior notes and increases in taxes payable. Working capital increased $30.7 million, or 18.0%, from $170.6 million at September 30, 2005 to $201.3 million at September 30, 2006 largely as a result of merger and acquisition activity as well as strong revenue growth. Net accounts receivable which includes billed and unbilled costs and fees, net of billings in excess of costs on uncompleted contracts, decreased $9.0 million, or 1.2% to $760.9 million at

48


December 30, 2006 from $769.9 million at September 30, 2006. Net accounts receivable increased $188.9 million, or 32.5% to $769.9 million at September 30, 2006 from $581.0 million at September 30, 2005. For the same period, annual revenues increased at a notably higher level of $1.0 billion, or 43.1%, from $2.4 billion to $3.4 billion.

        Because our revenues depend to a great extent on billable labor hours, most of our charges are invoiced following the end of the month in which the hours were worked, the majority usually within 15 days. Other direct costs are normally billed along with labor hours. However, as opposed to salary costs, which are generally paid on either a bi-weekly or monthly basis, other direct costs are generally not paid until we receive payment (in some cases in the form of advances) from our customer.

        At September 30, 2006 and December 31, 2006, our long-term obligations consisted of the following:

 
  September 30, 2006
  December 31, 2006
 
 
  (in thousands)

 
Amended and Restated Credit Agreement   $   $  
Term Credit Agreement     65,000     57,000  
Senior Notes     68,810     68,810  
Bank Overdraft Facilities     2,716     5,895  
Other Debt     929     1,931  
   
 
 
Total long-term obligations     137,455     133,636  
Less: Current portion of long-term obligations     (14,665 )   (29,521 )
   
 
 
Long-term obligations, less current portion   $ 122,790   $ 104,115  
   
 
 

        We have an unsecured senior credit agreement with a syndicate of banks to support our working capital needs. On September 22, 2006, this facility was extended to March 31, 2011. The facility consists of a revolving line of credit in the amount of $300.0 million which includes a sub-limit for standby letters of credit of $50.0 million. We may borrow, at our option, at either (a) a base rate (the greater of the Federal Funds rate plus 0.50% or the bank's reference rate) plus a margin which ranges from 0.00% to 0.25%, or (b) an offshore, or LIBOR, rate plus a margin which ranges from 0.75% to 1.75%, depending on our leverage ratio. In addition to these borrowing rates, there is a commitment fee which ranges from 0.175% to 0.375% on any unused commitment. Borrowings under the credit facility are limited by certain affirmative and negative financial covenants, which include maximum leverage restrictions, minimum fixed charge coverage and minimum net worth maintenance. At September 30, 2006 and December 31, 2006, there were no borrowings under the credit facility. At September 30, 2006 and December 31, 2006, outstanding standby letters of credit totaled $23.1 million and $23.9 million, respectively. At December 31, 2006, we had $276.1 million available for borrowing under the credit facility.

        On September 22, 2006, certain of our wholly-owned subsidiaries closed an unsecured term credit agreement with a syndicate of banks to facilitate dividend repatriations under favorable tax terms. The term credit agreement provided for a $65.0 million, five-year term loan among four subsidiary borrowers and one subsidiary guarantor. In order to obtain more favorable pricing and other terms, we also provided a parent company guarantee. The terms and conditions of this agreement are substantially similar to those contained in our senior unsecured credit facility. Principal payments are

49


scheduled to begin June 30, 2007, or earlier at the borrowers' discretion. At December 31, 2006, borrowings under this term credit agreement totaled $57.0 million.

        June 2008 Notes:    On June 9, 1998, we issued $60.0 million of 6.93% senior notes due June 9, 2008. The June 2008 Notes are unsecured and have an average life of seven years. The annual principal payments of $8.6 million began June 9, 2002.

        October 2008 Notes:    On September 9, 2002, we issued $25.0 million of 6.23% senior notes due October 15, 2008. The October 2008 Notes are unsecured and have an average life of five years. The annual principal payments of $8.3 million were scheduled to begin October 15, 2006; however, we elected to pre-pay the first principal payment in September 2006.

        April 2012 Notes:    On April 14, 2000, we issued $35.0 million of 8.38% senior notes due April 14, 2012. The April 2012 Notes are unsecured and have an average life of 10 years. The annual principal payments of $7.0 million are scheduled to begin April 14, 2008.

        All of the senior notes require interest to be paid either quarterly or semi-annually in arrears. The senior notes are also limited by certain affirmative and negative financial covenants, which include maximum leverage restrictions, minimum fixed charge coverage, minimum interest charge coverage and minimum net worth maintenance. Proceeds from the June 2008 Notes and the October 2008 Notes were used to repay revolving credit debt while proceeds of the April 2012 Notes were used to fund business acquisitions.

        At December, 31, 2006, we had three non-U.S. credit facilities used to cover periodic overdrafts and to issue letters of credit in the aggregate amount of $41.0 million.

        Further, at December 31, 2006, we had outstanding promissory notes of $0.9 million to former shareholders of Oscar Faber, predecessor to Faber Maunsell. These promissory notes have maturities ranging from January 2006 to April 2010.

        In February 2006, we closed a $235.0 million private placement of our Class F and Class G convertible preferred stock. In connection with the private placement, we redeemed all outstanding shares of our Class D convertible preferred stock and repurchased associated warrants to purchase common stock. Approximately $114.7 million of the $231.2 million in net proceeds was used to repay indebtedness under our senior credit facility and approximately $116.5 million was used to redeem the Class D preferred and associated warrants. The terms of the Class D convertible preferred stock contained a 7% annual dividend whereas the terms of the Class F and Class G do not require annual dividend payments.

        The Class F and Class G convertible preferred stock is redeemable on the earlier of February 9, 2012 or the date on which we sell substantially all of our assets and has other rights, privileges and preferences. See "Description of Capital Stock, Certificate of Incorporation and Bylaws" for a summary of the terms of the Class F and Class G convertible preferred stock.

        Other than normal property and equipment additions and replacements, expenditures to further the implementation of our ERP system, commitments under our incentive compensation programs, repurchases of shares of our common stock, and acquisitions from time to time, we currently do not

50


have any significant capital expenditures or outlays planned except as described below. However, if we acquire any additional businesses in the future or embark on other capital-intensive initiatives, additional working capital may be required.

        In July 2006, we entered into an agreement to acquire an interest in Shanghai Tunnel Engineering Co., Ltd., or STEC. STEC is a Shanghai, China-based design, engineering and construction firm which specializes in transportation design. The agreement is subject to Chinese government regulatory approval and other conditions. If we receive regulatory approval and satisfy all closing conditions, the purchase would be valued at approximately 328.0 million Chinese renminbi, or approximately $42.0 million, based upon indicative exchange rates as of the date of this prospectus. As of the date of this prospectus, we have not funded the STEC investment.

        As of December 31, 2006, there was approximately $44.6 million outstanding under standby letters of credit issued primarily in connection with general and professional liability insurance programs and for contract performance guarantees. In addition, in some instances we guarantee that a project, when complete, will achieve specified performance standards. If the project subsequently fails to meet guaranteed performance standards, we may either incur significant additional costs or be held responsible for the costs incurred by the client to achieve the required performance standards.

        At September 30, 2006, our defined benefit pension plans with benefit obligations in excess of plan assets had an aggregate deficit (where the projected benefit obligation exceeded the fair value of plan assets) of $117.2 million. At that same time, the excess of accumulated benefit obligations over fair value of plan assets was $84.8 million. See Note 9 to the Notes to Consolidated Financial Statements contained elsewhere in this prospectus. In the future, such pension under-funding may increase or decrease depending on changes in the levels of interest rates, pension plan performance and other factors.

Contractual Commitments

        The following summarizes our contractual obligations and commercial commitments as of September 30, 2006:

Contractual Obligations and Commitments

  Total
  Less than One Year
  One to Three Years
  Three to Five Years
  More than Five Years
 
  (in thousands)

Long-term debt (including accrued interest)   $ 137,455   $ 14,665   $ 56,290   $ 59,500   $ 7,000
Operating leases     446,631     87,163     131,976     90,089     137,403
Capital leases     1,620     1,215     405        
Interest     14,283     5,679     6,258     2,346    
Pension obligations(1)     214,006     14,396     36,770     40,010     122,830
   
 
 
 
 
Total Contractual Obligations and Commitments   $ 813,995   $ 123,118   $ 231,699   $ 191,945   $ 267,233
   
 
 
 
 

(1)
Retirement and retirement plan related obligations noted under the heading "More than Five Years" are presented for the years 2012-2016.

        We believe that our cash generated from operations and amounts that we expect to be available for borrowing under credit facilities will be sufficient to meet our capital requirements, including our commitments and contingencies, for at least the next 12 months.

Recently Issued Accounting Pronouncements

        In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans" (SFAS 158). SFAS 158 requires employers to fully recognize the

51



obligations associated with single-employer defined benefit pension, retiree healthcare and other post-retirement plans in their financial statements. We will be subject to the disclosure and recognition provisions of SFAS 158 in fiscal years beginning October 1, 2006 and 2007, respectively. We are currently evaluating the impact of the recognition provisions of SFAS 158 on our results of operations and financial position.

        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. The provisions of SFAS 157 will be effective for us in our fiscal year beginning October 1, 2008. We are currently evaluating the impact of the provisions of SFAS 157.

        In June 2006, the FASB issued FASB Interpretation, or FIN, No. 48, "Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109" (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements. FIN 48 prescribes that a company should use a "more-likely-than-not" recognition threshold based on the technical merits of the tax position taken. Additionally, FIN 48 provides guidance on recognition or de-recognition of interest and penalties, changes in judgment in interim periods, and disclosures of uncertain tax positions. FIN 48 became effective for us in our fiscal year beginning October 1, 2007. We are currently in the process of determining the effect of the adoption of FIN 48 on our results of operations and financial position.

        In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3" (SFAS 154), which applies to all voluntary changes in accounting principles, as well as to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. APB Opinion No. 20 previously required that most voluntary changes in accounting principle be recognized in net income as a cumulative effect of changing to the new accounting principle. SFAS 154 now requires retrospective application to prior periods' financial statements for changes in accounting principle, unless it is impracticable to do so. SFAS 154 became effective for us in our fiscal year beginning October 1, 2006. We currently do not anticipate any voluntary changes in accounting principle or errors that would require such retroactive application.

        In April 2006, the FASB issued FASB Staff Position No. FIN 46(R)-6, "Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R)" (FSP FIN 46(R)-6), which addresses how a reporting enterprise should determine the variability to be considered in applying FIN No. 46 (revised December 2003), "Consolidation of Variable Interest Entities," or FIN 46(R). The variability that is considered in applying FIN 46(R) affects the determination of (a) whether the entity is a variable interest entity, (b) which interests are variable interests in the entity and (c) which party, if any, is the primary beneficiary of the variable interest entity. That variability will affect any calculation of expected losses and expected residual returns, if such a calculation is necessary. FSP FIN 46(R)-6 provides additional guidance to consider for determining variability. FSP FIN 46(R)-6 is effective for us beginning the first day of our fiscal quarter beginning October 1, 2006. We are currently evaluating the impact of the provisions of FSP FIN 46(R)-6 on our results of operations and financial position.

Financial Market Risks

        We are exposed to market risk, primarily related to foreign currency exchange rates and interest rate exposure of our debt obligations that bear interest based on floating rates. We actively monitor these exposures. To reduce our exposure to market risk, we have entered into derivative financial instruments such as forward contracts or interest rate hedge contracts. Our objective is to reduce, where we deem appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign exchange rates and interest rates. It is our policy and practice to use derivative financial

52



instruments only to the extent necessary to manage our exposures. We do not use derivative financial instruments for speculative purposes. We currently have no material derivative instruments outstanding.

        We are exposed to foreign currency exchange rate risk resulting from our operations outside of the United States. We do not comprehensively hedge our exposure to currency rate changes; however, we limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments to be in currencies corresponding to the currency in which costs are incurred. As a result, we typically do not need to hedge foreign currency cash flows for contract work performed. The functional currency of all significant foreign operations is the local currency.

        Our senior revolving credit facility and certain other debt obligations are subject to variable rate interest which could be adversely affected by an increase in interest rates. As of September 30, 2005, September 30, 2006 and December 31, 2006, we had $130.0 million, $0.0 and $0.0 million, respectively, outstanding in borrowings under our credit facility. Interest on amounts borrowed under the credit facility is subject to adjustment based on certain levels of financial performance. For borrowings at offshore rates, the applicable margin added can range from 0.75% to 1.75%. For fiscal 2006, our weighted average borrowings on our senior credit facility were $132.8 million. If short term floating interest rates were to increase or decrease by 1%, our annual interest expense could have increased or decreased by $1.3 million. For the three months ended December 31, 2006, our weighted average borrowings under our senior credit facility were $0.0. We invest our cash in money market securities or other high quality, short-term securities that are subject to minimal credit and market risk.

        We have selectively managed our floating interest rate exposure through the use of derivative instruments. In October 2005, we entered into two floating-to-fixed interest rate hedge contracts. From the inception through our voluntary early termination, the interest rate hedges were effective. Upon our termination of these contracts in our fourth quarter of fiscal 2006, we received a net cash settlement of approximately $1.1 million.

Subsequent Event

        As of February 20, 2007, all of our outstanding loans previously made to certain directors and senior officers under our Senior Executive Equity Investment Plan, or SEEIP, to fund purchases of Company stock were terminated and repaid.

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BUSINESS

Overview

        We are a leading global provider of professional technical and management support services to government and commercial clients on all seven continents. We provide planning, consulting, architectural and engineering design, and program and construction management services for a broad range of projects including highways, airports, bridges, mass transit systems, government and commercial buildings and water and wastewater facilities. We also provide facilities management, training, logistics and other support services primarily for agencies of the United States government. Through our network of approximately 28,000 employees in over 60 countries, we provide our services to a number of end markets, with particular strength in the transportation, facilities and environmental markets. With over 60% of our employees operating outside the United States, we believe we are well positioned to grow both in the United States and internationally. According to Engineering News-Record's (ENR) 2006 Design Survey, we are the largest general architectural and engineering design firm in the world, ranked by 2005 design revenue. In addition, we are ranked by ENR as the leading firm in numerous design end markets including transportation and general building.

        The following two charts illustrate the diversification of our fiscal 2006 revenue by client type and geography.

Fiscal 2006 Revenue by Client Type   Fiscal 2006 Revenue by Geography(1)
     
GRAPHIC   GRAPHIC

(1)
By location of project

        We offer our broad range of services through our two business segments: Professional Technical Services and Management Support Services.

        Professional Technical Services (PTS).    Our PTS segment delivers planning, consulting, architectural and engineering design, and program and construction management services to institutional, commercial and government clients worldwide in major end markets such as transportation, facilities, environmental management and power. The transportation market includes transit and rail, highways and bridges, airports, ports and harbors. The facilities market includes governmental, institutional, commercial and industrial facilities. The environmental market includes water supply and wastewater infrastructure, water resources, and environmental management. We also provide services for projects in the mining, power and energy end markets.

        For example, we are providing master planning services for the 2012 London Summer Olympic Games, program management services through a joint venture for the Second Avenue subway line in New York City and engineering and environmental management services to support global energy infrastructure development for a number of large petroleum companies. Our PTS segment contributed

54



$2.8 billion, or 81.0% of our revenue, in fiscal 2006. The following table highlights our principal PTS end markets along with a list of additional representative projects:

End Market

  Approximate
Percentage of
Fiscal 2006
PTS Segment
Revenue (%)

  Representative Projects
  Project
Locations

Transportation   30   • Second Avenue Subway
• Sydney Orbital Bypass
• Sutong Bridge
• John F. Kennedy Airport
  U.S.
Australia
China
U.S.

General Building   50   • 2012 London Olympics
• Pentagon Renovation
• British Broadcasting Company Headquarters
• Los Alamos National Laboratory
  U.K.
U.S.
U.K.
U.S.

Environmental   20   • Harbor Area Treatment Scheme
• Chicago Calumet and Stickney Wastewater Treatment Plants
• New York City Bowery Bay
  Hong Kong
U.S.

U.S.

        Management Support Services (MSS).    Our MSS segment provides facilities management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the U.S. government. We have over 9,000 employees managing projects for over 400 contract-specific job sites for U.S. government clients such as the Department of Defense, Department of Energy and the Department of Homeland Security. For example, we manage more than 6,000 employees in Kuwait who provide logistics, security, communications and information technology services for the U.S. Army Central Command-Kuwait. We also provide operations and maintenance services for the U.S. Army's Fort Polk Joint Readiness Training Center in Louisiana. Our MSS segment contributed $647 million, or 18.9% of our revenue, in fiscal 2006, representing an increase of 109.4% over fiscal 2005 MSS revenue. The following table highlights representative projects in our MSS segment:

Representative Projects

  Project Locations
  Clients
• Nevada Test Site   U.S.   U.S. Dept. of Energy
• Camp Doha Army Base   Kuwait   U.S. Dept. of Defense
• Fort Polk Training Center   U.S.   U.S. Dept. of Defense
• International Civilian Police (CIVPOL)   Various worldwide   U.S. Dept. of State

Our Market Opportunity

        According to ENR, the top 500 design firms in the United States ranked by revenue generated revenue of approximately $59.8 billion in 2005, which was an 11.8% increase over 2004. Of this $60 billion in revenue, the largest two categories were general building and transportation, representing $23 billion and $20 billion, respectively. Water and wastewater combined represented an additional $13 billion in 2005 revenues. According to ENR, based on 2005 revenue, we were the #1 design firm in transportation, #1 in general building, #2 in wastewater and #4 in water supply.

        We believe that the growth opportunities for these markets are significant, both in the United States and internationally, fueled by the increasing global spending on infrastructure, among other factors.

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Professional Technical Services

        The U.S. Department of Commerce forecasts that increases in work associated with the nonresidential building, power and highway markets will contribute to the overall value of new construction contracts awarded in the United States, which are expected to increase slightly to $1.17 trillion in 2007. The U.S. Department of Commerce projects that this growth in nonresidential construction will counter expected major declines in the value of residential construction during 2007. We are positioned to benefit from this trend in that we are focused on government, commercial and industrial projects, with no material exposure to the residential housing market.

        Transportation.    The transportation market is significant and growing, both domestically and internationally, and we expect this will continue in coming years. Transportation services include the design and construction management of a broad range of transportation infrastructure projects, including airports, seaports, bridges, tunnels, railway lines and highways. According to ENR, the top 500 engineering design firms earned $20.3 billion in revenue in 2005 as a result of transportation work. The U.S. Department of Commerce projected in late 2006 that the dollar value of domestic transportation construction projects would grow 11.9% during 2006 and that it will grow an additional 3% in 2007, to a value of $31 billion. The Department of Commerce also predicted that highway and street spending, which it categorizes separately from transportation, would increase 16% in 2006 and will rise another 7% in 2007 to reach $81.5 billion. Growth in domestic transportation spending is driven by such factors as the continuation of federal funding for SAFETEA-LU, a $286 billion highway funding bill. Growth is also driven by increased domestic spending on highway projects, the increased utilization of road, rail, airport and seaport facilities, combined with the obsolescence of many existing facilities. In addition, domestic growth is driven by significant increases in the use of aviation facilities. Domestic airline passenger traffic has returned to and surpassed the 65.4 million monthly travelers level achieved prior to September 2001. Healthier state budgets have also fueled infrastructure activity. California, for example, passed a $20 billion bond measure for transportation in 2006 that has the potential to increase spending in this area substantially in the coming years.

        The increased momentum of public private partnerships, or PPP, has fueled alternative sources of funding for major transportation projects. These have included the sale of toll highways in Chicago and Indiana and the privatization of airports, including Chicago's Midway Airport.

        We expect growth in the U.S. transportation market will also be driven by clients seeking a broader range of services from engineering and construction firms. Clients are demanding an increased focus on program and construction management and are seeking a full range of services including project design, delivery, financing and procurement. We believe this trend will provide additional revenue for these firms.

        The international transportation market also presents growth opportunities. International transportation growth is driven by both the need to upgrade existing facilities and the demand for new infrastructure, particularly in emerging markets. China, for example, annually constructs approximately 4,000 kilometers of highways and reported investing $12 billion in a rural road construction project intended to connect all Chinese cities with a population over 200,000 and 95% of rural towns by 2010. Emerging markets are also investing heavily in aviation infrastructure. According to the U.S. Embassy in China, the country will build 108 new airports between 2004 and 2009, including what will be the world's largest airport, the Beijing International Airport, that is scheduled to open in time for the Beijing Olympics and will cover more than 1 million square meters.

        General building.    We expect this market will exhibit significant strength in the next several years. ENR reports that $22.9 billion in revenue was earned by the top-500 design firms in 2005 from general building. General building includes the construction of commercial buildings, office complexes, schools, hotels and correctional facilities. The U.S. Department of Commerce projected in late 2006 that commercial construction spending would increase 11% in 2006 and rise another 10% during 2007 to

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reach $90 billion, that education construction spending would rise 7% in 2006 and rise another 5% in 2007 to reach $88.3 billion, that office construction would rise 15.1% in 2006 and rise another 11.8% in 2007 to reach $61.4 billion and that lodging construction would rise 50% in 2006 and increase an additional 14.7% in 2007 to approach $22.6 billion. Demand for commercial construction is driven by several factors, including lower commercial vacancy rates, greater investor interest in office and other commercial properties, low domestic unemployment rates, and historically low interest rates.

        In the United States, public demand for general building services is also driven by increased federal, state and local government educational spending and continuing government expenditures in other facilities such as courthouses and correctional facilities. Growth in the latter is being driven by mandatory sentencing guidelines and other judicial trends resulting in longer incarceration periods for a greater number of offenders.

        Internationally, strong global economic growth is fueling the demand for facilities design and construction. We believe we are well positioned to take advantage of international demand for such services. Over the next decade, over 400 new buildings more than 50 stories tall are expected to be built around the world in regions such as the Middle East and China, according to Emporis Buildings, an international database of building information. By 2015, half of the world's new building construction is expected to take place in China. Even today, the American Forest and Paper Association estimates that construction represents about 16% of China's GDP amid a national trend toward urbanization. We are well positioned globally to take advantage of these kinds of opportunities.

        Water, Wastewater & Environmental Management.    There is significant global demand for water, wastewater and environmental services. This market is characterized by projects including water treatment facilities, water distribution systems, desalination plants, solid waste disposal systems, environmental impact studies, remediation of hazardous materials and pollution control. ENR reports that the water and wastewater market contributed $13.4 billion in 2005 revenue to the top-500 design firms. Growth in this area is driven by the domestic water and wastewater sectors, which we believe are growing at a rate between 8% and 10% annually. FMI Corp., a Denver-based industry management consultant, predicts that water supply construction spending will increase 9% and that sewer system spending will rise 10% in 2007.

        Domestic growth in the water, wastewater and environmental markets is driven by government regulations, including the Clean Water Act and Clean Air Act, by a growing U.S. population, and by a shift of the U.S. population toward the Southeast and Southwest, where there are significant water supply challenges. In addition, a renewed focus on micro-contaminants and carcinogens has given rise to increased centralization and standardization efforts, including increased federal involvement in water quality regulation. Internationally, demand is driven by the need to repair and upgrade local water systems and increased global population and concomitant demand for water reuse and desalinization technologies. Urbanization and rapid economic growth resulting in higher standards of living in such developing countries as India and China will drive demand for water and wastewater infrastructure development in these regions. In addition, developing nations face significant environmental issues. Governments in developing regions are likely to seek to address environmental concerns as they gain the economic means to improve the quality of life of their citizens. For example, according to the World Health Organization, seven of the ten most polluted cities in the world are located in China.

        Urbanization.    While U.S. cities are relatively mature and historically have suffered from population flight to suburban and other outlying areas, that trend has reversed in recent years as "baby boomers" have returned to major urban areas. Outside the U.S., economic growth opportunities have caused an influx of people from rural to developing urban areas. In parts of Europe, government policy strongly encourages urban redevelopment. Urbanization creates significant opportunities for our PTS segment in all of our end markets as it creates increased demand in urban areas for transportation infrastructure, facilities and power systems, greater pressure on water/wastewater systems and increased

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environmental pollution that needs to be mitigated. It also creates demand for urban master planning and environmental assessments.

        The table below highlights some of the key factors driving growth in our PTS core markets.

Growth Drivers
Market

  Domestic
  International

Transportation

 

• Healthy state and local budgets
• $286 billion of federal funding for SAFETEA-LU from 2006-2010
• Increased utilization of aging transportation
• Introduction of public to private partnerships (PPP) to the United States

 

• Emerging markets creating demand for greenfield transportation infrastructure and large scale improvement projects
• Global trend towards PPP and other private sector spending on infrastructure
• Increased foreign direct investment



General Building

 

• Historically low interest rate environment driving significant spending
• Demand for nonresidential building space continues to expand
• Increased spending in hospital healthcare infrastructure as babyboomers age
• Strong demand for nonresidential / commercial space

 

• Healthy global economy
• Continued population pressures in developing urban areas such as China, Russia and India
• Urbanization trends fostering rapid residential construction spending



Water/Wastewater/ Environmental

 

• Increasing federal regulatory pressure
—Clean Water Act
—Clean Air Act

 

• Global population growth
• Increased focus on quality and safety

Management Support Services

        We believe the market for our MSS segment is growing. MSS segment services include facilities management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the U.S. government. The Center for Strategic and International Studies estimated that the domestic market for the kinds of facility-related services provided by our MSS segment was $36 billion in 2004, the most recent full year for which federal procurement data were available. Our MSS work is primarily for such federal government agencies as the Departments of Defense, Energy, Justice and Homeland Security. Growth in the MSS segment will likely be driven by a continued government outsourcing trend due in part to an aging government workforce and on-going military operations in the Mideast and elsewhere as well as military force realignments. We believe these trends will enhance the demand for outsourcing in the government services area for firms with experience in security, logistics and overseas operations.

Our Competitive Strengths

        We believe we have the experience, relationships, technical expertise and personnel to lead our clients through their most complicated and critical technical undertakings while also delivering the level

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of consistent, quality service necessary to maintain long-term relationships and secure repeat engagements. Our key competitive strengths include:

We have leadership positions in large, growing markets.

        We believe the growing trend for outsourcing of professional technical and support services complements our capabilities, size and experience in providing these services and positions us to continue to strengthen our business. Based on ENR's rankings of firms by 2005 revenue, we are highly ranked in a number of key engineering and consulting services sectors, including transportation (#1), general building (#1), wastewater (#2) and water supply (#4). We also have a leadership position in many key specialty technical areas within our core end markets including:

Transportation
  General Building
  Environmental
 
  Ranking
   
  Ranking
   
  Ranking
Mass Transit and Rail   1   Educational Facilities   1   Wastewater Treatment   2
Airports   1   Government Offices   1   Sanitary and Storm Sewers   2
Marine and Ports   1   Correctional Facilities   1   Sewerage and Solid Waste   2
Highways   1   Hotels/Convention Center   3   Water Supply   4
Bridges   2   Commercial Offices   4   Clean Air Compliance   4

We are diversified across service lines, end markets and geographies.

        We perform a broad spectrum of services for our clients, from planning and design to construction and project management and logistics. In fiscal 2006, excluding the U.S. federal government, no single customer accounted for more than 10% of our total revenue. The U.S. federal government, including the Department of Defense, Department of Energy and the Department of Homeland Security, accounted for approximately 28% of our total revenue in fiscal 2006. The U.S. federal government accounted for approximately 12% of the revenue of our PTS segment and almost all of the revenue of our MSS segment for fiscal 2006. In addition, our 25 largest projects by gross profit in fiscal 2006 accounted for only 14% of our consolidated gross profit. We believe this diversification enables us to take advantage of changing business, technological and economic conditions worldwide, and allows us to better manage our business through market cycles. We further believe we are well-positioned in geographic areas with favorable growth prospects such as China/Hong Kong and the United Arab Emirates, where we are among the largest engineering design firms. This diversification has been a key factor in our historical growth and positions us for future growth.

We combine global reach with local presence.

        We have a global network of approximately 28,000 employees with projects in over 60 countries. We combine intimate local market knowledge and relationships with the technical expertise, size, experience and resources of one of the world's largest engineering and design services companies. We believe that our ability to share capabilities and best practices across the firm delivers significant value to our clients and enables us to win and efficiently execute projects worldwide. As of September 30, 2006, approximately 62% of our employees were located outside the United States. We operate through a number of wholly-owned subsidiaries that have the advantage of competing under several internationally known brand names in our end markets, while maintaining the recognition that they are part of AECOM, a global company.

We have strong and long-standing client relationships.

        We have developed strong and long-term relationships with a number of large corporations and government entities worldwide. For example, several of our operating companies have been providing services for over 30 years to clients such as the Illinois State Tollway Authority, U.S. Navy, Massachusetts Water Resources Authority and the Port Authority of New York and New Jersey. We

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believe that these types of long-term relationships allow us to better understand and be more responsive to our clients' needs and better manage their risks. These relationships also lead to repeat business opportunities and opportunities to expand the scope of the value-added services we provide to existing clients.

We have a successful history of executing and integrating acquisitions.

        We believe one of our core competencies is successfully identifying, executing and integrating acquisition opportunities. We have consummated more than 30 mergers and acquisitions since 1998 that have enabled us to expand our end markets, service offerings and geographic reach. This acquisition activity has provided us with access to new markets at lower risk and faster speed relative to our entering the markets as a new participant. We have targeted, and we will continue to target, firms that enable us to add backlog, long-term client relationships and experienced executives who can provide leadership across our company. In addition, we derive our acquisition synergies through "cross selling" the capabilities of our newly acquired companies to our existing clients and our global capabilities to clients of our newly acquired companies.

        The following is a brief summary of some of our key mergers and acquisitions since 2000:

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We benefit from our experienced management team and employees.

        We have a talented, dedicated and experienced work force, located across the globe, led by an experienced executive management team. Our Chief Executive Officer and the 10 most senior members of our operating units have an average of more than 20 years of experience with AECOM and more than 25 years in our industry. We also have a large, experienced and skilled workforce. This human capital is essential in winning the most attractive work in our industry. Our long-standing practice is to provide employee incentives, such as stock ownership, that are designed to optimize performance and to ensure our ability to attract and retain a quality work force.

        Our talented workforce is essential in allowing us to obtain quality projects. In turn, our success in winning desirable and challenging projects assists us in attracting and retaining highly qualified people.

Our Growth Strategy

        We intend to grow our business by leveraging our competitive strengths and leadership positions in our core markets while opportunistically entering new markets and geographies. Key elements of our growth strategy include:

Expand our long-standing client relationships and provide our clients with a broad range of services.

        We have long-standing relationships with a number of large corporations, public and private institutions and governmental agencies worldwide. We will continue to focus on client satisfaction along with opportunities to sell a greater range of services to clients and deliver full-service solutions for their needs. For example, as we have grown our environmental business, we have provided environmental services for transportation and other infrastructure projects in which such services have in the past been subcontracted to third parties.

        By integrating and providing a broad range of services, we believe we deliver maximum value to our clients at competitive costs. Also, by coordinating and consolidating our knowledge base, we believe we have the ability to export our leading edge technical skills to any region in the world in which our clients may need them. This advances our strategy of providing a full-service solution for our clients' needs.

Capitalize on growth opportunities in our core markets.

        Our core end markets, including transportation, general building and environmental, are expected to continue to grow. We intend to build on our leading positions in these markets to increase our market share. With our track record and our global resources, we believe we are well positioned to win projects in these markets. We believe that the need for infrastructure upgrades, environmental management and increased government spending and outsourcing of support services, among other things, will result in continued growth opportunities in our core markets.

Continue to pursue our merger and acquisition strategy.

        We intend to continue to attract other successful companies whose growth can be enhanced by joining us. This approach has served us well as we have strengthened and diversified our leadership positions both geographically, technically and across end markets. We believe that the trend towards consolidation in our industry will continue to produce attractive candidates that align with our merger and acquisition strategy. For example, we significantly strengthened our presence in the fast-growing market in the United Arab Emirates with the addition of Cansult Limited in September 2006.

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Strengthen and support human capital.

        Our experienced employees and management are our most valued resources. Attracting and retaining key personnel has been and will remain critical to our success. We will continue to focus on providing our personnel with training and other personal and professional growth opportunities, performance-based incentives, opportunities for stock ownership and other competitive benefits in order to strengthen and support our human capital base. Over the past five years, we have substantially increased our employee base. This increase comes from organic growth as well as growth from mergers and acquisitions. Our employee population has grown from approximately 12,700 employees as of September 30, 2001 to approximately 28,500 as of December 31, 2006. In 2006, we expanded our firm-wide employee engagement program to put increased focus and resources on this important strategic area. The program includes elements designed to foster professional and career development and advance leadership development, promote succession planning and firmly link employee engagement with our business objectives. We believe that our employee programs align the interests of our personnel with those of our clients and stockholders.

Our Business Segments

        The following table sets forth the revenues attributable to our business segments for the periods indicated(1):

 
  Year Ended September 30,
  Year Ended December 31,
 
  2004
  2005
  2006
  2005
  2006
 
  (in thousands)

  (in thousands)

Professional Technical Services (PTS)   $ 1,777,718   $ 2,082,618   $ 2,772,833   $ 612,264   $ 753,545
Management Support Services (MSS)     232,143     309,053     647,188     134,479     184,680
   
 
 
 
 
Total   $ 2,009,861   $ 2,391,671   $ 3,420,021   $ 746,743   $ 938,225
   
 
 
 
 

(1)
For a reconciliation to the consolidated statements of income, see note 19 to the notes to our consolidated financial statements and note 6 to our condensed consolidated financial statements contained elsewhere in this prospectus.

        Our PTS segment is comprised of a broad array of services, generally provided on a fee-for-service basis. These services include planning, design, consulting, program management and construction management for industrial, commercial, institutional and government clients worldwide. For each of these services, our technical expertise includes civil, structural, process, mechanical, geotechnical systems and electrical engineering, architecture, landscape and interior design, urban and regional planning, project economics, and environmental, health and safety work.

        With our technical and management expertise, we are able to provide our clients with the full spectrum of services they may require. For example, within our environmental management service offerings, we provide regulatory compliance planning and management, environmental modeling, environmental impact assessment and environmental permitting for major capital/infrastructure projects. In addition, we provide specialized services in areas such as environmental toxicology, health and safety risk assessment, sanitary engineering, air quality analysis, water resources protection and development, remediation consulting, brownfield reclamation and sustainable land use development programs.

        Our services may be sequenced over multiple phases. For example, in the area of program management and construction management services, these services may begin with a small consulting or planning contract, and may later develop into an overall management role for the project or a series of

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projects, which we refer to as a program. Program and construction management contracts typically employ a staff of 10 to more than 100 and, in many cases, operate as an outsourcing arrangement with our staff located at the project site. For example, since 1990, we have been managing the renovation work at the Pentagon for the U.S. Department of Defense, and we currently have approximately 100 staff members located on-site. Another example of our program and construction management services would be our services related to the development of educational facilities for K-12 school districts and/or community colleges. We are performing these types of assignments throughout the U.S., including the cities of Dallas, Los Angeles and Houston.

        We provide the services in our PTS segment both directly and through joint venture or similar partner arrangements to a broad range of diverse end markets, including:

        Transportation.    We serve several key transportation sectors, including:

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        Through our MSS segment, we offer infrastructure management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the United States government.

        We provide a wide array of services in our MSS segment, both directly and through joint venture or similar partner arrangements, including:

        Installation, Operations and Maintenance.    Projects include Department of Defense and Department of Energy installations where we provide comprehensive services for the operation and maintenance of complex government installations, including military bases, test ranges and equipment. We have undertaken assignments in this category in the Middle East and the U.S. We also provide services for the operations and maintenance of the Department of Energy's Nevada Test Site.

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        Logistics and Field Services.    Projects include logistics support services for a number of Department of Defense agencies and defense prime contractors focused on developing and managing integrated supply and distribution networks. We oversee warehousing, packaging, delivery and traffic management for the distribution of government equipment and materials.

        Training.    Projects include training applications in live, virtual and simulation training environments. We have conducted training at the U.S. Army's Center for Security Training in Maryland for law enforcement and military personnel. We have also supported the training of international police officers and peacekeepers for deployment in various locations around the world in the areas of maintaining electronics and communications equipment.

        Systems Support.    Projects cover a diverse set of operational and support systems for the maintenance, operation and modernization of Department of Defense and Department of Energy installations. Our services in this area range from information technology and communications to life cycle optimization and engineering, including environmental management services. Through our joint venture operations at the Nevada Test Site and the Combat Support Services operation in Kuwait, our teams are responsible for facility and infrastructure support for critical missions of the U.S. government in its nonproliferation efforts, emergency response readiness, and force support and sustainment. Enterprise network operations and information systems support, including remote location engineering and operation in classified environments, are also areas of specialized services we provide.

        Technical Personnel Placement.    Projects include the placement of personnel in key functional areas of military and other government agencies, as these entities continue to outsource critical services to commercial entities. We provide systems, processes and personnel in support of the Department of Justice's management of forfeited assets recovered by law enforcement agencies. We also support the Department of State in its enforcement programs by recruiting, training and supporting police officers for international and homeland security missions.

        Field Services.    Projects include maintaining, modifying and overhauling ground vehicles, armored carriers and associated support equipment both within and outside of the United States under contracts with the Department of Defense. We also maintain and repair telecommunications systems for military and civilian entities. The ability to deploy highly mobile field response teams to locations across the world to supplement mission support and equipment readiness is a critical requirement in this service area.

Our Clients

        Our clients consist primarily of national governments, state, regional and local governments, public and private institutions and major corporations. The following table sets forth our total revenues attributable to these categories of clients for each of the periods indicated:

 
  Year Ended September 30,
 
 
  2004
  %
  2005
  %
  2006
  %
 
 
  (dollars in thousands)

 
U.S. Federal Government                                
  PTS   $ 153,302   8 % $ 215,951   9 %   319,675   9 %
  MSS     232,143   11 %   309,052   13 %   641,764   19 %
U.S. State and Local Governments     801,680   40 %   788,463   33 %   848,530   25 %
Non-U.S. Governments     333,083   17 %   475,991   20 %   355,835   10 %
   
 
 
 
 
 
 
  Subtotal Governments     1,520,208   76 %   1,789,457   75 %   2,165,804   63 %
Private Entities (worldwide)     491,767   24 %   605,883   25 %   1,255,688   37 %
   
 
 
 
 
 
 
  Total   $ 2,011,975   100 % $ 2,395,340   100 % $ 3,421,492   100 %
   
 
 
 
 
 
 

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        Other than the U.S. government, no single client accounted for 10% or more of our revenues in any of the past five fiscal years. The work attributed to the U.S. government for fiscal 2006 includes our work for the Department of Defense, Department of Energy and the Department of Homeland Security. The diversity of our client base is illustrated by the fact that for fiscal 2006, our 25 largest projects, as measured by gross profit, accounted for less than 15% of our consolidated gross profit.

Contracts

        The price provisions of the contracts we undertake can be grouped into two broad categories: cost-reimbursable contracts and fixed-price contracts. The majority of our contracts fall under the relatively lower risk category of cost-reimbursable contracts.

        Cost-reimbursable contracts consist of two similar contract types, cost-plus and time and material.

        Cost Plus.    Cost plus is the predominant contracting method used by U.S. federal, state and local governments. These contracts provide for reimbursement of actual costs and overhead incurred by us, plus a predetermined fee. Under some cost-plus contracts, our fee may be based on quality, schedule and other performance factors.

        Time and Material.    Time and material is common for smaller scale engineering and consulting services. Under these types of contracts, we negotiate hourly billing rates and charge our clients based upon actual hours expended on a project; unlike cost-plus, however, there is no predetermined fee. In addition, any direct project expenditures are passed through to the client and are reimbursed. These contracts may have a fixed price element in the form of not-to-exceed or guaranteed maximum price provisions.

        For fiscal 2006, cost-reimbursable contracts represented approximately 68% of our total revenues, with cost-plus contracts constituting approximately 50% and time and material contracts constituting approximately 18% of our total revenues.

        Fixed-price contracts are the predominant contracting method outside of the United States. There are typically two types of fixed-price contracts. The first and more common type, lump-sum, involves performing all of the work under the contract for a specified lump-sum fee. Lump-sum contracts are typically subject to price adjustments if the scope of the project changes or unforeseen conditions arise. The second type, fixed-unit price, involves performing an estimated number of units of work at an agreed price per unit, with the total payment under the contract determined by the actual number of units performed.

        Many of our lump-sum contracts are negotiated and arise in the design of projects with a specified scope. Lump-sum contracts often arise in the area of construction management. Construction management services can be in the form of general administrative oversight (in which we do not assume responsibility for construction means and methods and is on a cost-reimbursable basis), or on a fixed price, "at risk" basis. We perform a limited amount of construction management "at risk."    Under construction management at risk, we are typically responsible for the design of the facility with the contract price negotiated after we have secured specific bids from various subcontractors and added a contingency and fee. This process is often referred to as "design-build."

        Some of our fixed-price contracts require us to provide performance bonds or parent company guarantees to assure our clients that their project will be completed in accordance with the terms of our contracts. In such cases, we typically require our primary subcontractors to provide similar bonds and guarantees or be adequately insured, and we pass the terms and conditions set forth in our

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agreement to our subcontractors. We typically mitigate the risks of fixed-price contracts by contracting to complete the projects based on our design as opposed to a third party's design, by not self-performing the construction, by not guaranteeing new or untested processes or technologies and by working only with experienced subcontractors with sufficient bonding capacity. When public agencies seek a design-build approach for major infrastructure projects, we may act as a fixed-price design subcontractor to the general construction contractor and do not assume overall project or construction risk.

        For fiscal 2006, fixed price contracts represented approximately 32% of our total revenue. Of this amount, less than 10% of our contracts have exposure to construction cost overruns. Of the remaining approximately 22%, there may be risks associated with our professional fees if we not able to perform our professional services for the amount of the fixed fee. However, we attempt to mitigate these risks as described above.

        Some of our larger contracts may operate under joint ventures or other arrangements under which we team with other reputable companies, typically companies with which we have worked with for many years. This is often done where the scale of the project dictates such an arrangement or when we want to strengthen either our market position or our technical skills.

Backlog

        At December 31, 2006, our revenue backlog was approximately $2.9 billion, an increase of $0.4 billion, or 15.0%, from $2.5 billion at December 31, 2005. Of this $2.9 billion, we estimate that approximately $2.0 billion will be completed by December 31, 2007. Approximately $2.5 billion of our total backlog at December 31, 2006 is attributable to our PTS segment, while the remaining $0.4 billion is attributable to our MSS segment. No assurance can be given that we will ultimately realize our full backlog.

        Most of our government contracts are multi-year contracts for which funding is appropriated on an annual basis. In the case of these government contracts, our backlog includes only those amounts that have been funded and authorized and therefore does not reflect amounts we may receive over the term of the contracts. In the case of non-government contracts, our backlog includes future revenue at contract rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in backlog to the extent of the remaining estimated amount. We calculate backlog without regard to possible project reductions or expansions or potential cancellations until such changes or cancellations occur.

        Backlog is expressed in terms of revenue and therefore may include significant estimated amounts of third party, or pass-through costs to subcontractors and other parties. Moreover, our backlog for the period beyond 12 months may be subject to variations from year to year as existing contracts are completed, delayed or renewed or new contracts are awarded, delayed or cancelled. As a result, we believe that year-to-year comparisons of the portion of backlog expected to be performed more than one year in the future are difficult to interpret and not necessarily indicative of future revenues or profitability. Because backlog is not a defined accounting term, our computation of backlog may not necessarily be comparable to that of our peers.

Competition

        The professional technical and management support services markets we serve are highly fragmented and we compete with a large number of regional, national and international companies. Certain of these competitors have greater financial and other resources than we do. Others are smaller and more specialized, and concentrate their resources in particular areas of expertise. The extent of our

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competition varies according to the particular markets and geographic area. The degree and type of competition we face is also influenced by the type and scope of a particular project. Our clients make competitive determinations based upon experience, reputation and ability to provide the relevant services in a timely, safe and cost-efficient manner.

Seasonality

        The fourth quarter of our fiscal year (July 1 to September 30) is typically our strongest quarter. The U.S. federal government tends to authorize more work during the period preceding the end of its fiscal year, September 30. In addition, many U.S. state governments with fiscal years ending on June 30 tend to accelerate spending during the fiscal first quarter when new funding budgets become available. Within the U.S., as well as other parts of the world, we generally benefit from milder weather conditions in our fiscal fourth quarter, which allows for more productivity from our field inspection and other on-site civil services. Our construction and project management services also typically expand during the high construction season of the summer months.

Insurance and Risk Management

        We maintain insurance covering professional liability and claims involving bodily injury and property damage. We consider our present limits of coverage, deductibles, and reserves to be adequate. Wherever possible, we endeavor to eliminate or reduce the risk of loss on a project through the use of quality assurance/control, risk management, workplace safety and similar methods. A majority of our operating subsidiaries are quality certified under ISO 9001:2000 or an equivalent standard, and we plan to continue to obtain certification where applicable. ISO 9001:2000 refers to international quality standards developed by the International Organization for Standardization, or ISO.

        Risk management is an integral part of our project pricing for fixed price contracts and our project execution process. We have a risk management group that reviews and oversees the risk profile of our operations. This group also participates in evaluating risk through internal risk analyses in which our corporate management reviews higher-risk projects, contracts or other business decisions that require corporate approval.

Regulation

        We are regulated in a number of fields in which we operate. In the United States, we deal with numerous U.S. government agencies and entities, including branches of the U.S. military, the Department of Defense, the Department of Energy, intelligence agencies and the Nuclear Regulatory Commission. When working with these and other U.S. government agencies and entities, we must comply with laws and regulations relating to the formation, administration and performance of contracts. These laws and regulations, among other things:

        Internationally, we are subject to various government laws and regulations (including the U.S. Foreign Corrupt Practices Act and similar non-U.S. laws and regulations), local government regulations and procurement policies and practices and varying currency, political and economic risks.

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        To help ensure compliance with these laws and regulations, all of our employees are required to complete tailored ethics and other compliance training relevant to their position and our operations.

Personnel

        Our principal asset is our employees. A large percentage of our employees have technical and professional backgrounds and bachelor and advanced degrees. We believe that we attract and retain talented employees by offering them the opportunity to work on highly visible and technically challenging projects in a stable work environment. The tables below identify our personnel by segment and geographic region.

 
  As of September 30,
   
 
  As of December 31,
2006

 
  2004
  2005
  2006
Professional Technical Services   13,000   16,300   19,000   19,400
Management Support Services   4,700   5,700   8,300   9,100
   
 
 
 
Total   17,700   22,000   27,300   28,500
   
 
 
 
 
  As of September 30,
   
 
  As of December 31,
2006

 
  2004
  2005
  2006
Americas   8,500   10,100   10,400   10,500
Europe   1,900   2,700   3,100   3,000
Middle East   3,600   5,200   8,800   9,700
Asia/Pacific   3,700   4,000   5,000   5,300
   
 
 
 
Total   17,700   22,000   27,300   28,500
   
 
 
 
 
  As of September 30, 2006
  As of December 31, 2006
 
  PTS
  MSS
  Total
  PTS
  MSS
  Total
Americas   9,600   800   10,400   9,700   800   10,500
Europe   3,100     3,100   3,000     3,000
Middle East   1,300   7,500   8,800   1,400   8,300   9,700
Asia/Pacific   5,000     5,000   5,300     5,300
   
 
 
 
 
 
Total   19,000   8,300   27,300   19,400   9,100   28,500
   
 
 
 
 
 

        We have a number of personnel with "Top Secret" or "Q" security clearances. Some of our contracts with the U.S. government relate to projects that have elements that are classified for national security reasons. Although most of our contracts are not themselves classified, persons with high security clearances are often required to perform portions of the contracts.

        A portion of our employees are employed on a project by project basis to meet our contractual obligations, generally in connection with government projects in our MSS segment. Approximately 200 of our employees are covered by collective bargaining agreements. We believe our employee relations are good.

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Geographic Information

        For geographic information, please refer to footnote 19 of our consolidated financial statements found elsewhere in this prospectus.

Properties

        Our corporate offices are located in approximately 72,000 square feet of space at 555 and 515 South Flower Street, Los Angeles, California. Our other offices consist of an aggregate of approximately 3.8 million square feet worldwide. We also maintain smaller administrative or project offices. Virtually all of our offices are leased. See Note 11 of the notes to our consolidated financial statements for information regarding our lease obligations. We believe our current properties are adequate for our business operations and are not currently underutilized. We may add additional facilities from time to time in the future as the need arises.

Legal Proceedings

        As a government contractor, we are subject to various laws and regulations that are more restrictive than those applicable to non-government contractors. Intense government scrutiny of contractors' compliance with those laws and regulations through audits and investigations is inherent in government contracting, and, from time to time, we receive inquiries, subpoenas, and similar demands related to our ongoing business with government entities. Violations can result in civil or criminal liability as well as suspension or debarment from eligibility for awards of new government contracts or option renewals.

        We are involved in various investigations, claims and lawsuits in the normal conduct of our business, none of which, in the opinion of our management, based upon current information and discussions with counsel, is expected to have a material adverse effect on our consolidated financial position, results of operations, cash flows or our ability to conduct business. From time to time we establish reserves for litigation when we consider it probable that a loss will occur.

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MANAGEMENT

Board of Directors and Executive Officers

        The names, ages and positions of our directors and executive officers are as follows:

Name

  Age(1)
  Position
John M. Dionisio   58   Director, President and Chief Executive Officer
Richard G. Newman   72   Director, Chairman
Francis S. Y. Bong   64   Director, Chairman Asia
H. Frederick Christie   73   Director
James H. Fordyce   47   Director
S. Malcolm Gillis   66   Director
Linda Griego   59   Director
Robert J. Lowe   66   Director
William G. Ouchi   63   Director
William P. Rutledge   64   Director
Lee D. Stern   55   Director
James R. Royer   60   Executive Vice President and Chief Operating Officer
Michael S. Burke   43   Executive Vice President, Chief Corporate Officer and Chief Financial Officer
Glenn R. Robson   44   Senior Vice President and Chief Strategy Officer
Raymond W. Holdsworth   63   Vice Chairman, Corporate Development
David N. Odgers   64   Vice Chairman, Professional Development

(1)
All ages are as of January 1, 2007

        John M. Dionisio was appointed our President and Chief Executive Officer on October 1, 2005 and was elected to our Board of Directors in December 2005. From October 2003 to October 2005, Mr. Dionisio served as our Executive Vice President and Chief Operating Officer. From October 2000 to October 2003, Mr. Dionisio served as President and Chief Executive Officer of our subsidiary, DMJM+Harris. Mr. Dionisio joined Frederic R. Harris, Inc., in 1971, predecessor company to DMJM+Harris where he served in many capacities, including Chief Executive Officer from October 1999 to October 2003, President from July 1996 to October 1999, Executive Vice President in charge of all U.S. operations from 1993 to 1996 and Manager of the New York Operations and Northern Region Manager from 1992 to 1993.

        Richard G. Newman has been a member of our Board of Directors since May 1990 and currently is our Chairman. Mr. Newman was our President until 1993, and then Chairman, President and Chief Executive Officer from May 1993 to October 2000 and Chairman and CEO from 2000 to 2005. He served as a director of Ashland Technology Corporation from February 1989 until it became AECOM in April 1990. Mr. Newman was also President of Ashland Technology, which later became AECOM, from December 1988 until May 1990. Previously, he was President and Chief Operating Officer of Daniel, Mann, Johnson & Mendenhall from October 1985 to December 1988 and a Corporate Vice President or Vice President of DMJM from 1977 to 1985. Mr. Newman is also a director of Southwest Water Company, Sempra Energy Company and 14 mutual funds affiliated with Capital Research and Management Company.

        Francis S. Y. Bong was named to our Board of Directors after our merger with Maunsell in May 2000. He serves as Chairman for our operations in Asia. Prior to our merger with Maunsell, Mr. Bong was Chairman and Chief Executive of Maunsell Consultants Asia Holding Ltd. from 1997 to 2000 and served as Managing Director of the same firm from 1987 to 1996. Mr. Bong started with

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Maunsell in 1975. Mr. Bong also serves on the Board of Directors of Cosmopolitan International Holdings Ltd. as a non-executive director.

        H. Frederick Christie was named to our Board of Directors in August 1990. From 1987 until his retirement in 1989, Mr. Christie served as President and Chief Executive Officer of The Mission Group, where he was responsible for all of the non-utility subsidiaries of SCEcorp., the parent company of Southern California Edison Company. Mr. Christie served as President and as a director of Southern California Edison Company from November 1984 until September 1987 after having previously served as Executive Vice President and Chief Financial Officer. He is also a member of the Board of Directors of IHOP Corp., Southwest Water Company, Ducommun Incorporated, and 21 mutual funds affiliated with Capital Research and Management Company.

        James H. Fordyce was named to our Board of Directors in February 2006. Mr. Fordyce is a Managing Director with J.H. Whitney Capital Partners, LLC, a private investment firm. He has been with J.H. Whitney since July 1996. Mr. Fordyce began his career at Chemical Bank in 1981, where he spent eight years primarily in their leveraged buyout group before then joining Heller Financial, Inc. as a Senior Vice President where he spent his time investing both debt and equity. Mr. Fordyce is currently a director of several privately-held companies.

        S. Malcolm Gillis was named to our Board of Directors in January 1998. From July 2004 to present, Dr. Gillis has been a University Professor at Rice University. Dr. Gillis served as President of Rice University from July 1993 to June 2004. Before assuming the presidency of Rice, Dr. Gillis was a professor at Duke University from 1984 to 1993, where he served as Dean of the Faculty of Arts and Sciences from 1991 to 1993. He was at Harvard University from 1969 to 1984, where he did extensive teaching and consulting in the area of international economics, with particular emphasis on Latin America and Asia, working with heads of state on economic policy issues. Dr. Gillis was a director of the Federal Reserve Bank of Dallas from 1998 to 2004. Dr. Gillis is a member of the board of directors of Halliburton Company, Electronic Data Systems Corporation, Introgen Therapeutics, Inc. and Service Corporation International. Dr. Gillis also serves on the boards of various educational and charitable organizations and government commissions and committees.

        Linda Griego was named to our Board of Directors in June 2005. Ms. Griego has served as President and Chief Executive Officer of Griego Enterprises, Inc. since 1985 and is also Managing General Partner of Engine Co. No. 28, a restaurant that she founded in 1988. From July 1999 until January 2000, Ms. Griego served as interim President and Chief Executive Officer of the Los Angeles Community Development Bank. She is currently a director of Granite Construction Incorporated, City National Bank and Southwest Water Company. Ms. Griego has also served as a Los Angeles branch director of the Federal Reserve Bank of San Francisco.

        Robert J. Lowe was named to our Board of Directors in February 1993. Mr. Lowe is Chairman and Chief Executive Officer of Lowe Enterprises, Inc. and its affiliated companies. He was the principal founding shareholder in 1972 of the corporation that became Lowe Enterprises, Inc. Mr. Lowe also serves on the Board of Claremont McKenna College and on the boards of various charitable organizations and government commissions and committees.

        William G. Ouchi joined our Board of Directors in May 2003. Dr. Ouchi is the Sanford and Betty Sigoloff Distinguished Professor in Corporate Renewal in the Anderson School of Management at the University of California, Los Angeles. He has been on the faculty of UCLA since 1979. Dr. Ouchi is a director of Sempra Energy, FirstFed Financial Corp. and the Conrad N. Hilton Foundation. Dr. Ouchi has also been Vice Dean for Executive Education at UCLA and Chief of Staff for the Mayor of Los Angeles. Dr. Ouchi also serves on the boards of various charitable organizations.

        William P. Rutledge was named to our Board of Directors in November 1998. Mr. Rutledge was President and Chief Executive Officer of Allegheny Teledyne, Inc. from August 1996 until his

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retirement in 1997. Mr. Rutledge serves as Chief Executive Officer of Aquanano, LLC. Mr. Rutledge also serves on the Board of Directors of FirstFed Financial Corp., Communications & Power Industries, Sempra Energy Corporation and the board of trustees of Lafayette College, Saint John's Health Center Foundation and the World Affairs Council of Los Angeles.

        Lee D. Stern was named to our Board of Directors in February 2006. Mr. Stern is a Managing Director at GSO Capital Partners LP., an investment advisor managing several private investment funds. Prior to joining GSO, Mr. Stern was the chief transaction officer of Technology Investment Capital Corp. from November 2003 to September 2005 and has over 20 years of financial and investment experience in leveraged finance and in financing technology companies. Prior to Technology Investment Capital Corp., Mr. Stern was with the boutique investment banking firm Hill Street Capital from March 2001 to November 2003. From 1997 to 2000, he was a partner of Thomas Weisel Partners and NationsBanc Montgomery, where he focused on leveraged transactions relating to acquisition finance and leveraged buyouts, including private and public mezzanine finance. From 1993 to 1997, Mr. Stern was a managing director at Nomura Securities International, where he played a key role in building the firm's merchant banking and principal debt investing business. He sat on Nomura Securities International's commitment and underwriting committees. Mr. Stern has also held managing director positions at Kidder, Peabody & Co., Inc. from 1990 to 1992 and Drexel Burnham Lambert from 1985 to 1990.

        James R. Royer was appointed Executive Vice President and Chief Operating Officer in October 2005. From October 2004 to October 2005, Mr. Royer was Chief Executive of our Americas Facilities Group, Regional Group and Government Services Group. He was appointed Chairman of the Board of our subsidiary DMJM H&N in February 2002 and Chief Executive Officer in April 2003. Prior to that, he served as Chairman of the Board, President and Chief Executive Officer of our subsidiary TCB INC. from August 1991 to September 2003, and continued in his role as Chief Executive Officer of TCB INC. until October 2004. He was elected President of Turner Collie & Braden Inc. (TCB) in 1987. He served in various senior management positions with TCB, including Vice President from 1982 through 1987. Mr. Royer is a director and former Chairman of the Greater Houston Partnership and is also a member of the board of directors of Memorial Herman Health Care System in Houston.

        Michael S. Burke was appointed Executive Vice President and Chief Corporate Officer in May 2006 and was appointed Chief Financial Officer in December 2006. Mr. Burke joined AECOM as Senior Vice President, Corporate Strategy in October 2005. From 1990 to 2005, Mr. Burke was with the accounting firm, KPMG LLP. He served in various senior leadership positions most recently as a Western Area Managing Partner from 2002 to 2005 and was a member of KPMG's Board of Directors from 2000 through 2005. While on the KPMG Board of Directors, Mr. Burke served as the Chairman of the Board Process and Governance Committee and a member of the Audit and Finance Committee. Mr. Burke also serves on various charitable and community boards.

        Glenn R. Robson was appointed Senior Vice President and Chief Strategy Officer in December 2006. Mr. Robson joined AECOM in May 2002 as Senior Vice President and Chief Financial Officer. Prior to joining AECOM, Mr. Robson worked at Morgan Stanley & Co. Incorporated for twelve years, where he served most recently as a Managing Director in the investment banking division, and previously as a Principal and Vice President in the corporate finance department. Earlier in his career, Mr. Robson was a Business Analyst with McKinsey & Company.

        Raymond W. Holdsworth was appointed Vice Chairman, Corporate Development in October 2005. Prior to this position, Mr. Holdsworth served as our President from March 2000 to October 2005. From January 1999 to March 2000, Mr. Holdsworth was Group Chief Executive for three of AECOM's operating companies. He was President & Chief Executive Officer of DMJM from April 1993 to 1997,

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and Chairman & Chief Executive Officer from then until January 1999. Mr. Holdsworth served as DMJM's Vice President for Corporate Development from June 1992 to April 1993.

        David N. Odgers was appointed Vice Chairman, Professional Development, in October 2005. From October 2005 to September 2006 he was also Chief Executive of our Global Group. From the time of our merger with Maunsell in April 2000 until September 2005, Mr. Odgers was responsible for our operations outside of the Americas. Mr. Odgers was Chief Executive of the Maunsell Group from 1998 until the merger, before which, from 1989, he was Chief Executive of Maunsell Pty Ltd in Australia. He served in a variety of positions of increasing responsibility with the Maunsell Group since he started with the Group in 1965.

Composition of the Board of Directors

        In accordance with the terms of our Restated Certificate of Incorporation, the terms of office of members of our Board of Directors, other than the two members elected by holders of our Class F and Class G convertible preferred stock, are divided into three classes:


        Our Class I directors are Richard G. Newman, Linda Griego and William G. Ouchi, our Class II directors are John M. Dionisio, Robert J. Lowe and William P. Rutledge, and our Class III directors are Francis S. Y. Bong, H. Frederick Christie and S. Malcolm Gillis. In addition, holders of a majority of our Class F convertible preferred stock and holders of a majority of our Class G convertible preferred stock are each entitled to elect one director annually to our Board of Directors. These seats are currently held by James H. Fordyce for the Class G preferred stock and Lee D. Stern for the Class F preferred stock. At each annual meeting of stockholders, the successors to the directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting following such election. Any vacancies in our classified Board will be filled by the remaining directors and the elected person will serve the remainder of the term of the class to which he or she is appointed. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors, subject to the rights of holders of Class F preferred stock and Class G preferred stock.

        Our Board of Directors has determined that the following members are independent as determined in reference to the standards of the New York Stock Exchange: Mr. Christie, Mr. Fordyce, Mr. Gillis, Ms. Griego, Mr. Lowe, Mr. Ouchi, Mr. Rutledge and Mr. Stern.

Board Structure and Committee Composition

        As of the date of this prospectus, our Board has eleven directors and the following four committees: Audit, Compensation and Organization, Nominating and Governance and Planning, Finance and Investments. The membership during the last fiscal year and the function of each of the

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committees are described below. During fiscal 2006, our Board held five meetings. Each director attended at least 75% of all Board and applicable committee meetings.

 
  Audit
Committee

  Compensation
and Organization
Committee

  Nominating and
Governance
Committee

  Planning,
Finance and
Investment
Committee

Francis S.Y. Bong               X
H. Frederick Christie*   X   Chairperson        
James H. Fordyce       X       X
S. Malcolm Gillis   X       Chairperson    
Linda Griego   X   X   X    
Robert J. Lowe       X       Chairperson
William G. Ouchi       X   X   X
William P. Rutledge   Chairperson           X
Lee D. Stern   X   X   X    

*
lead independent director

        Audit Committee.    The Audit Committee of our Board of Directors consists of William P. Rutledge (Chairperson), H. Frederick Christie, S. Malcolm Gillis, Linda Griego and Lee D. Stern. The Audit Committee, which is composed solely of independent directors, makes recommendations to our Board of Directors regarding the selection of independent auditors, reviews the results and scope of the audit and other services provided by our independent auditors, and reviews and evaluates our audit and control functions. Our Audit Committee held five meetings during fiscal year 2006. Our Board of Directors has determined Mr. Rutledge, Chairperson of the Audit Committee, and several other members of the Audit Committee qualify as "audit committee financial experts" as defined by the rules under the Securities Exchange Act of 1934. The background and experience of each of our audit committee members are set forth above.

        Compensation and Organization Committee.    The Compensation and Organization Committee of our Board of Directors consists of H. Frederick Christie (Chairperson), James H. Fordyce, Linda Griego, Robert J. Lowe, William G. Ouchi and Lee D. Stern. The Compensation and Organization Committee, comprised solely of independent directors, oversees our compensation plans and organizational matters. Such oversight includes decisions regarding executive management salaries, incentive compensation and long-term compensation plans as well as company wide incentive and equity plans for our employees and consultants and appointments and promotions for senior management. Our Compensation and Organization Committee held seven meetings during fiscal year 2006.

        Nominating and Governance Committee.    The Nominating and Governance Committee of our Board of Directors consists of S. Malcolm Gillis (Chairperson), Linda Griego, William G. Ouchi, and Lee D. Stern. The Nominating and Governance Committee is comprised solely of independent directors and is responsible for recruiting and retention of qualified persons to serve on our Board of Directors, including proposing such individuals to the Board of Directors for nomination for election as directors, for evaluating the performance, size and composition of the Board of Directors and for oversight of our compliance activities. The Nominating and Governance Committee considers written suggestions from stockholders, including potential nominees for election, and oversees the corporation's governance programs. Our Nominating and Governance Committee held five meetings during fiscal year 2006.

        Planning, Finance and Investment Committee.    The Planning, Finance and Investment Committee of our Board of Directors consists of Robert J. Lowe (Chairperson), Francis S.Y. Bong, James H.

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Fordyce, William G. Ouchi and William P. Rutledge. The Planning, Finance and Investment Committee reviews our financing programs, proposed investments, including mergers, and other strategic initiatives. Our Planning, Finance and Investment Committee held six meetings in fiscal year 2006.

Compensation Committee Interlocks and Insider Participation

        None of the members of the Compensation and Organization Committee of our Board of Directors is an officer or employee of our company. No executive officer of our company serves as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving on our Compensation and Organization Committee.

Executive Sessions

        Executive sessions of non-management directors are included on the agenda for every regularly scheduled Board and Board committee meeting. The Board sessions are chaired by H. Frederick Christie the board's lead independent director and the chairperson of the applicable committee chairs the committee executive sessions. Any director can request that an additional executive sessions be scheduled.

Compensation of the Board of Directors

        Those of our directors who also serve as our officers or consultants, or as officers or consultants of our subsidiaries, or those directors representing the Class F and G preferred stock are not compensated by us for attending meetings or performing any other function of the Board. All other directors are paid a retainer of $36,000 per year. In addition, non-employee directors (other than directors elected by holders of our Class F and Class G convertible preferred stock) receive the following meeting fees:

        Our non-employee directors are entitled to defer some or all of their annual retainers and meeting fees to our Non-Qualified Stock Purchase Plan and receive common stock units, except for non-U.S. resident directors who may be permitted to defer into their local AECOM stock plans.

        Each non-employee director, at the time he or she is first elected to our Board of Directors, receives options to purchase 5,000 shares of our common stock under our Stock Incentive Plan for Non-Employee Directors and thereafter will receive annually options for a number of shares approved by the Board of Directors. The exercise price for such options is the market value of our common stock on the date of grant and the options are exercisable six months after the grant date. The compensation described above does not apply to the directors elected by the holders of the Class F and Class G convertible preferred stock.

Limitation of Directors' Liability and Indemnification

        As permitted by Delaware law, our Certificate of Incorporation contains a provision eliminating the personal liability of our directors to us and our stockholders for monetary damages for breaches of their fiduciary duty as directors to the fullest extent permitted by the General Corporation Law of Delaware. Under the present provisions of the General Corporation Law of Delaware, our directors' personal liability to us and our stockholders for monetary damages may be so eliminated for any breach

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of fiduciary duty as a director other than (i) any breach of a director's duty of loyalty to us or to the stockholders, (ii) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law, (iii) dividends or stock repurchases or redemptions that are illegal under Delaware law, and (iv) any transaction from which a director receives an improper personal benefit. This provision pertains only to breaches of duty by directors as directors and not in any other corporate capacity, such as being an officer. As a result of the inclusion of such provision in our Certificate of Incorporation, our stockholders may be unable to recover monetary damages against directors for actions taken by them that constitute gross negligence or that are in violation of their fiduciary duties, although it may be possible to obtain injunctive or other equitable relief with respect to such actions. If equitable remedies are found not to be available to stockholders in any particular case, stockholders may not have any effective remedy against the challenged conduct.

        Our bylaws require us to indemnify our officers and directors against expenses and costs, judgments, settlements and fines reasonably incurred in the defense of any claim, including any claim brought by us or in our right, to which they were made parties by reason of being or having been officers or directors.

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EXECUTIVE COMPENSATION

Compensation Discussion & Analysis

        Our compensation programs are designed to provide an overall total direct compensation package that is competitive with our peer companies, allow us to attract and retain key talent, and provide incentives that promote short- and long-term financial growth and stability to continuously enhance stockholder value based on a pay-for-performance model. We refer to the executive officers named in the Summary Compensation Table that follows this Compensation Discussion & Analysis (such officers being our Chief Executive Officer (CEO) and President, Chairman, Chief Financial Officer, Chief Corporate Officer, Chief Operating Officer, and Chairman of Asia) as "Named Executive Officers." The Compensation and Organization Committee of the Board of Directors reviews and approves the compensation program for our Named Executive Officers and oversees our executive compensation strategy.

        To implement these principles, we target base salary compensation for our Named Executive Officers at the 50th percentile of appropriate peer group companies taking into account the experience level of the individuals in their current positions. Short term compensation or annual incentive bonuses for the Named Executive Officers are based on a comparison to the peer group's prior twelve month performance in the areas of growth in earnings before interest, taxes and amortization (EBITA), return on investment (ROI) and growth in earnings per share. Similarly, long-term compensation for our Named Executive Officers is based on these same benchmarks comparing our performance over the prior five years against that of the peer group.

        Our Compensation and Organization Committee then considers these quantitative performance comparisons and the compensation of executives of the peer group companies in similar positions, as well as qualitative performance factors they deem important to insure the alignment of our executives' compensation with the goals of our stockholders. The qualitative factors are developed with the CEO for the Named Executive Officers reporting to the CEO, and by the Compensation and Organization Committee for the CEO. These qualitative factors include items such as experience, leadership, integrity, strategic planning, team building, diversity, stability and succession planning.

        Our compensation package for our Named Executive Officers generally consists of:

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        We evaluate each of these three components of compensation described above for each of our Named Executive Officers in determining a compensation program that will encourage the overall success of the individuals and our Company.

        As our financial performance improves relative to the performance targets, the Named Executive Officers' potential for additional compensation under the short-term and long-term incentive programs will increase. To help establish and review the compensation paid to the Named Executive Officers, our Compensation and Organization Committee reviews an executive compensation report prepared by Towers Perrin, an independent third-party consulting firm. This report compares performance of the Company and each element of compensation to comparable positions within the general population of similarly sized companies and also to a group of peer companies in our sector including CH2M Hill, Fluor, Foster Wheeler, Jacobs Engineering, Michael Baker, Shaw Group, Tetra Tech, URS and Washington Group International.

        Should actual performance fall short of performance targets, total compensation will be reduced. Base compensation is established for a fiscal year and is not adjusted based on performance for the current year. Short-term compensation may be reduced to zero should performance fall short of established targets. Long-term compensation, as described below, is generally subject to company-wide performance targets for the Named Executive Officers. If the Company falls short of its performance targets for the three year performance period, the payout of the restricted stock units will be reduced and may be reduced to zero for significant shortfalls based on a pre-established formula. Our Compensation and Organization Committee evaluates on an annual basis past performance, competitor performance and general market conditions to establish future performance targets.

        The Company does not currently have a policy requiring a fixed course of action with respect to compensation adjustments following later restatements of performance targets. Under those circumstances, the Compensation and Organization Committee would evaluate whether compensation adjustments were appropriate based upon the facts and circumstances surrounding the restatement.

        As described above, we strive to provide our Named Executive Officers with a competitive base salary that is in-line with their roles and responsibilities when compared to peer companies of comparable size. We view base salary as an important component to each Named Executive Officer's overall compensation package. The base salary level is established and reviewed based on the level of responsibilities, the experience and tenure of the individual, and the amount of performance based incentives received or granted each year. The base salary is compared annually to the list of similar positions within comparable peer companies and with consideration of the executive's relative experience in his or her position. Base salaries are reviewed annually and at the time of promotion or other changes in responsibilities.

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        Our short-term incentive compensation program allows us to create annual performance criteria that are flexible and that change with the needs of our business. By creating target awards and setting performance objectives at the beginning of each fiscal year, our Named Executive Officers understand the goals and priorities of the Company during the current fiscal year. Our CEO and his management team are responsible for the overall performance of the Company in accordance with our strategic operating plan, as approved annually by our Board of Directors, and are thus evaluated on these objectives.

        Named Executive Officers may receive approximately 25 – 40% of their total compensation as incentive compensation. The measurement criteria for our CEO and our Chairman's incentive compensation bonuses for fiscal year 2006 were based on our overall corporate level performance measures including growth in EBITA, EBITA return compared to the total invested capital, and growth in earnings per share after adjustments for one-time merger related expenses. For our other Named Executive Officers (other than our CEO and our Chairman), the following criteria for incentive compensation bonuses for fiscal year 2006 were used: overall corporate level performance measures including EBITA vs. plan, annual growth in EBITA, cash flow, backlog and a discretionary component. The discretionary component took into account qualitative achievements such as seamless transition of the CEO, Chief Operating Officer and Chief Financial Officer positions in fiscal 2006; initiating and completing significant mergers, including effective integration; aggressive quality and safety development plans; development and implementation of our employee engagement programs; cross-selling and production sharing between our operating brands; and other personal accomplishments. The Compensation and Organization Committee determines the final incentive compensation for the Named Executive Officers.

        We provide two types of long-term compensation pursuant to our Stock Incentive Plan: Performance Earnings Program (PEP) restricted stock units and options to purchase AECOM common stock.

        Our long-term incentive compensation programs are designed to focus and reward our Named Executive Officers on our long-term goals. By creating a three-year performance period under our PEP (described below) to complement our stock option program, our goal is to encourage and to provide an incentive for our Named Executive Officers to advance AECOM's long-term goals and enhance stockholder value. Our Named Executive Officers may receive approximately 25 – 60% of their total compensation as long-term incentive compensation.

        Once per year, our CEO provides the Compensation and Organization Committee with a recommended total dollar pool for long-term incentives to be awarded to all Named Executive Officers as well as other key executives, excluding the CEO and the Chairman. The Compensation and Organization Committee then reviews the report from the executive compensation consultants, including the comparable total direct compensation amounts of peer companies and determines the final total dollar amount of long-term incentives that are to be awarded to the Named Executive Officers, including the CEO's and Chairman's final total long-term incentive compensation.

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        Generally, since the initiation of the PEP program, the stock options have not been issued to Named Executive Officers as part of their long-term incentive compensation. Effective September 28, 2006, our Board of Directors approved a one-time 100% acceleration of vesting of all employee stock options outstanding as of such date, including options held by Named Executive Officers. The decision to accelerate the vesting of stock options was taken by our Board of Directors with the belief that it is in the best interest of our shareholders to reduce non-cash compensation expense that otherwise would have been recorded beginning in fiscal year 2007 upon the adoption of Statement of Financial Accounting Standards 123R (Share-Based Payment).

        Executive Life Insurance.    Our Named Executive Officers are eligible to participate in an Executive Life Insurance plan on an annual basis. This plan is in addition to the basic life insurance program which is open to a large majority of AECOM employees. The Executive Life Insurance plan provides up to an additional $800,000 in coverage.

        Executive Medical Insurance.    Our Named Executive Officers are eligible to participate in an Executive Medical Insurance plan on an annual basis. This plan is in addition to the basic medical insurance programs that are open to most AECOM employees. The Executive Medical Insurance plan provides up to 100% reimbursement for certain medical expenses up to $75,000 per calendar year.

        Senior Executive Equity Investment Plan.    We established the Senior Executive Equity Investment Plan (SEEIP) in March 1998 to encourage our senior officers to invest in AECOM common stock by providing loans to fund the purchase of the stock. All of the current Named Executive Officers have had at least one outstanding SEEIP loan note. Under the program, participants also received a company stock match on the amount of stock purchased with the SEEIP loan. The stock match was subject to 10-year cliff vesting period.

        All of our outstanding SEEIP loans have been terminated and repaid. In connection with the termination and repayment of such loans or settlement with shares, our Board of Directors approved a 100% acceleration of vesting of all outstanding SEEIP Company stock matches effective on September 28, 2006. SEEIP or similar loans are no longer part of the compensation package awarded to any of our Named Executive Officers or directors.

        AECOM Pension Plan.    The AECOM Pension Plan is a defined benefit plan that was adopted in September 1990. Participation in the AECOM Pension Plan was frozen to new entrants effective April 1, 1998. Of our Named Executive Officers, only our CEO, Chairman and our Chief Operating Officer were employees as of April 1, 1998 and are eligible to receive a retirement pension benefit under the Pension Plan.

        Depending on the participant's years of service to AECOM, the pension benefits will range from 26% to 30.5% of the employee's final capped average monthly compensation plus an additional 11% to 12.5% of the employee's final capped average monthly compensation in excess of specified Social Security base amounts. The final average monthly compensation was capped as of April 1, 2004 at the employee's highest compensation for one full calendar year from 1994 through 2003. If the employee's final average monthly compensation as of April 1, 2004 was lower than the cap, the employee's final average compensation will continue to increase until the participant's average compensation reaches the compensation cap. Pension benefits will generally be reduced for participants with less than 25 years of service as required by plan rules. Employee contributions to the Pension Plan of up to 1.5% of compensation were required prior to April 1, 1998.

        We have generally replaced the AECOM Pension Plan with a 401(k) pension component of our Retirement & Savings Plan (RSP). Employees are allowed to make pre-tax or after-tax contributions of 0.5%, 1.0% or 1.5% of their compensation to this 401(k) pension component. The Company matches

82



dollar for dollar any such contributions and our matching contributions will vest after three years of service with the Company.

        AECOM Management Supplemental Executive Retirement Plan (MSERP).    The Company amended the AECOM Pension Plan, effective July 1, 1998, to provide for certain participants including Named Executive Officers (our CEO, Chairman and COO), earning benefits under the AECOM Pension Plan to instead earn identical benefits under a non-qualified plan known as the Management Supplemental Executive Retirement Plan, or MSERP. The MSERP replaces and provides a benefit identical in nature to the AECOM Pension Plan but on an unfunded basis.

        The benefits of each employee who participated in the AECOM Pension Plan or MSERP are reduced by the actuarial estimate of the equivalent of a hypothetical account balance, calculated to be what the employee would have in his or her 401(k) pension component from April 1, 1998 until the employee's retirement and if the 401(k) contributions had remained invested in a benchmark fund, which mirrors the AECOM Pension Plan investments.

        AECOM Supplemental Executive Retirement Plans (92 SERP & 96 SERP).    In October 1992 we established the unfunded Supplemental Executive Retirement Plan, or 92 SERP, and in July 1996 we established the unfunded Supplemental Executive Retirement Plan, or 96 SERP, in order to provide some of our U.S. resident executive officers with pre-retirement death benefits and retirement benefits consistent with the level provided by the previous AECOM Pension Plan formula. These Supplemental Executive Retirement Plans require a participant to have reached the minimum age of 50 and to have worked at AECOM for at least five years. The plans also include early retirement provisions at age 62 with full retirement benefits.

        Of our Named Executive Officers, only our CEO is eligible to receive any benefits from the 92 SERP and only our Chief Operating Officer is eligible to receive any benefits from the 96 SERP.

        In July of 1996 we established the AECOM Excess Benefit Plan for participants in the Supplemental Executive Retirement Plans in order to provide only those benefits which the AECOM Pension Plan cannot provide due to federal tax limits. Benefits from the Excess Benefit Plan are unfunded and will reduce, dollar-for-dollar, the pension benefit paid by the Supplemental Executive Retirement Plans.

        Except with respect to our Chief Operating Officer, we do not have any employment agreements in effect with any of our Named Executive Officers. We entered into this agreement with our Chief Operating Officer in connection with his joining us upon the acquisition of TCB, Inc. The employment agreement provides for a severance payment equal to 12 months salary for termination of employment by the Company without cause or by "Constructive Discharge," such as a material reduction in job duties or a required relocation without consent.

        There are no equity ownership requirements or guidelines that any of our employees must meet or maintain. We have a broad base of stock ownership by employees (including our Named Executive Officers) and believe that this enhances our success by aligning the interests of our employees and stockholders. We encourage Named Executive Officers to invest in our common stock through payroll deductions invested in our stock and matched by our typical company match formula, the grants of PEPs and in certain cases, stock options. In February 2007, we sold 16,228 shares of our common stock to our Chief Corporate Officer, who paid $500,000 for such shares.

83


        Our Compensation and Organization Committee approves the compensation for the CEO and the Chairman and reviews and approves management's recommendations for the CEO's direct reports. In addition, the Compensation and Organization Committee approves compensation philosophy, programs, and ensures that proper due diligence, deliberations, and reviews of executive compensation are conducted.

        The Compensation and Organization Committee uses Towers Perrin, an independent third-party consulting firm, to perform an analysis of comparable executive officer level positions within the general professional industry and a list of peer companies. The report of the consulting firm provides market survey information for base salary and short and long-term incentive compensation within the general industry companies and peer companies specified above.

        For fiscal 2006, the general industry companies used by our compensation consultant were companies in our general industry, with us being near the median regarding the gross revenues and profits of the group. The compensation consultant also provided comparisons of key performance metrics for the Company compared to the peer group. This established the basis for our overall performance which was considered when Compensation and Organization Committee reviewed the performance of and determined compensation for the Named Executive Officers.

        The following seven tables provide information regarding the compensation awarded to or earned during our fiscal year ended September 30, 2006 by our principal executive officer (PEO), principal financial officer (PFO) and the four most highly compensated executive officers other than the PEO and PFO.

Summary Compensation Table for Fiscal Year Ended September 30, 2006

Name and Principal Position

  Year
  Salary
($)(1)

  Bonus
($)(2)

  Stock
Awards
($)(3)

  Option
Awards
($)(4)

  Non-Equity
Incentive
Plan
Compensation
($)

  Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings ($)

  All Other
Compensation
($)

  Total
($)

John M. Dionisio
President and Chief Executive Officer (PEO)
  2006   $ 718,760   $ 850,000   $ 1,600,278   $   $   $ 89,436   $ 103,117 (5) $ 3,361,590
Richard G. Newman
Chairman
  2006   $ 900,016   $ 850,000   $ 1,324,378   $   $   $ 3,674   $ 116,947 (6) $ 3,195,015
James R. Royer
Executive Vice President and Chief Operating Officer
  2006   $ 443,758   $ 450,000   $ 316,871   $   $   $ 83,325   $ 87,427 (7) $ 1,381,381
Michael S. Burke
Executive Vice President and Chief Corporate Officer(12)
  2006   $ 353,853   $ 400,000   $ 240,295   $ 93,700 (8) $   $   $ 369,568 (9) $ 1,457,416
Francis S.Y. Bong
Chairman Asia
  2006   $ 347,431   $ 408,218   $ 273,899   $   $   $   $ 349,954 (10) $ 1,379,502
Glenn R. Robson
Senior Vice President and Chief Financial Officer (PFO)(12)
  2006   $ 343,751   $ 260,000   $ 219,584   $   $   $   $ 62,340 (11) $ 885,675

(1)
Includes deferrals to qualified defined contribution and non-qualified deferred compensation plans. For more information regarding amounts deferred into the non-qualified deferred compensation plan, please refer to the Nonqualified Deferred Compensation Table.

(2)
Includes the FY 2006 incentive compensation (IC) bonus amounts paid in December 2006 based on the results of each individual's performance criteria plus all cash bonuses accrued and paid in FY 2006 excluding IC paid in December 2005 since the amounts were accrued in FY 2005.

(3)
Each Named Executive Officer received a grant or grants under the Performance Earnings Program (PEP) in FY 2005 and FY 2006. Each participant in the PEP was awarded a specific number of target credits that will be earned by the participant throughout a three-year performance period based on a formula that will include multiple categories of performance for AECOM (refer to the long-term incentive awards section of the

84


(4)
Although AECOM was not subject to FAS 123R with respect to FY 2006, the disclosures in the Option Awards column are based on the dollar amounts that AECOM would have recognized as a compensation expense for financial reporting purposes under FAS 123R with respect to FY 2006 had AECOM been subject to FAS 123R. Please reference the Outstanding Awards at Fiscal Year-End and Option Exercises and Stock Vested tables for additional information with respect to all awards outstanding as of September 30, 2006.

(5)
This amount includes company match in the defined contribution Retirement & Savings Plan (RSP), company match in the non-qualified deferred compensation Stock Purchase Plan (SPP) in the amount of $51,494, executive life insurance premiums, executive medical insurance premiums in the amount of $26,899, tax gross-ups on the Medicare and FICA tax attributed to the non-qualified defined benefit plan benefits and the deferred compensation plans (M-SERP, SERP & SPP), travel expenses for spouse, entertainment/sporting event expenses and automobile related expenses.

(6)
This amount includes company match in the defined contribution Retirement & Savings Plan (RSP), company match in the non-qualified deferred compensation Stock Purchase Plan (SPP) in the amount of $52,156, executive life insurance premiums, executive medical insurance premiums in the amount of $26,899, tax gross-ups on the Medicare and FICA tax attributed to the non-qualified defined benefit plan benefits and the deferred compensation plans (M-SERP, SERP & SPP), travel expenses for spouse, company-paid charitable contributions, entertainment/sporting event expenses, membership dues and automobile related expenses.

(7)
This amount includes company match in the defined contribution Retirement & Savings Plan (RSP), company match in the non-qualified deferred compensation Stock Purchase Plan (SPP) in the amount of $12,833, executive life insurance premiums, executive medical insurance premiums in the amount of $26,899, tax gross-ups on the Medicare and FICA tax attributed to the non-qualified Defined Benefit benefits and the deferred compensation plans (M-SERP, SERP & SPP), travel expenses for spouse, membership dues, entertainment/sporting event expenses and automobile related expenses.

(8)
Michael Burke received options to purchase 10,000 shares of AECOM common stock granted on October 3, 2005 with an exercise price of $24.81 per share. This award is valued at a Black-Scholes value of $9.37 per share option as of the grant date. This Black-Scholes valuation includes the following assumptions: Time to Expiration of 7 years, which matches the life of the option as AECOM has historically not experienced early exercise of options by our executives; Risk Factor Rate of 4.31%, which is the market yield on U.S. Treasury securities at 7-year constant maturity as of October 3, 2005; and Volatility of 0.25, which considers volatility of publicly-traded comparable company stocks as of the valuation date.

(9)
This amount includes company match in the defined contribution Retirement & Savings Plan (RSP) in the amount of $25,150, company match in the non-qualified deferred compensation Stock Purchase Plan (SPP) in the amount of $242,749, a company match of $54,000 based on an 18% match on a $300,000 Senior Executive Equity Investment Plan (SEEIP) loan note issued on October 3, 2005, executive life insurance premiums, executive medical insurance premiums in the amount of $26,899, travel expenses for spouse, membership dues and automobile related expenses.

(10)
This amount includes company match in the Hong Kong Global Stock Plans in the amount of $212,047, company pension plan contributions to the Hong Kong MFP Pension Plan, executive medical insurance premiums, travel expenses for spouse, housing & travel allowances, membership dues and automobile related expenses.

(11)
This amount includes company match in the defined contribution Retirement & Savings Plan (RSP) and the non-qualified deferred compensation Stock Purchase Plan (SPP), executive life insurance premiums, executive medical insurance premiums in the amount of $26,899, tax gross-ups on the Medicare and FICA tax attributed to the SPP, membership dues and automobile related expenses.

(12)
Messrs. Robson and Burke's positions changed in December 2006. Mr. Burke has been named Executive Vice President, Chief Financial Officer and Chief Corporate Officer and is now our Principal Financial Officer, and Mr. Robson has been named Senior Vice President, Finance and Chief Strategy Officer.

85



Grants of Plan-based Awards for Fiscal Year 2006

 
   
  Estimated Future Payouts Under Non-Equity Incentive Plan Awards
  Estimated Future Payouts Under Equity Incentive Plan Awards(1)
   
   
   
   
 
Name and Principal Position

  Grant
Date

  Thresholds
($)

  Targets
($)

  Maximums
($)

  Thresholds
(#)

  Targets
(#)

  Maximums
(#)

  All Other Stock Awards:
Number of Shares or Stock/Units

  All Other Stock Awards:
Number of Securities Underlying Options

  Exercise or Base Price of Options Awards
($/Sh)(2)

  Grant Date
Fair value of stock and option awards(3)

 
John M. Dionisio
President and Chief Executive Officer
  12/01/2005   $   $   $   34,500   103,500   138,000           $   $ 2,567,835  

Richard G. Newman
Chairman

 

12/01/2005

 

$


 

$


 

$


 

20,450

 

61,350

 

81,800

 

 


 

 


 

$


 

$

1,522,094

 

James R. Royer
Executive Vice President and Chief Operating Officer

 

12/01/2005

 

$


 

$


 

 


 

5,000

 

15,000

 

20,000

 

 


 

 


 

$


 

$

372,150

 

Michael S. Burke
Executive Vice President and Chief Corporate Officer

 

10/30/2005
12/01/2005
12/01/2005

 

$


 

$


 

$


 

0
2,500
3,375

 

0
7,500
10,125

 

0
10,000
13,500

 

 


 

 

10,000
0
0

(4)


$

24.81

 

$
$
$

93,700
186,075
251,201


(5)

Francis S. Y. Bong
Chairman Asia

 

2/01/2005

 

$


 

$


 

$


 

3,750

 

11,250

 

15,000

 

$


 

$


 

$


 

$

279,113

 

Glenn R. Robson
Senior Vice President and Chief Financial Officer

 

12/01/2005

 

$


 

$


 

$


 

3,375

 

10,125

 

13,500

 

$


 

$


 

$


 

$

251,201

 

(1)
Each Named Executive Officer above received a grant under the Performance Earnings Program (PEP) in FY 2006, which program is administered under the AECOM Technology Corporation 2000 Stock Incentive Plan. Each participant in the PEP was awarded a specific number of target credits that will be earned by the participant throughout a three-year performance period based on a formula that will include multiple categories of performance for AECOM (refer to the long-term incentive awards section of the "Compensation Discussion & Analysis" section in this prospectus for more details regarding this program). The future value of these PEP awards is dependent upon the performance of the Company.
(2)
The exercise or base price of option awards granted is the fair market value of the Company's common stock as of the date of grant, as determined by the most recent valuation by an independent valuation firm for the quarter ending immediately prior to the grant date.

(3)
The grant date fair value of option awards is based upon the Black-Scholes value of such awards.
(4)
Michael Burke's options to purchase 10,000 shares of common stock were approved and granted in December 2005 with an exercise price at the then current stock price of $24.81 per share, as determined by the most recent valuation by an independent valuation firm for the quarter ending immediately prior to the grant date. The stock option was granted with a seven-year term, vesting one-third every year on the anniversary date of the grant. With approval by the Compensation and Organization Committee and the Board of Directors, we subsequently vested 100% of all stock options granted prior to September 28, 2006. Therefore, these stock options were fully vested in FY 2006.

(5)
As a new executive hire in FY 2005, Michael Burke received a partial PEP FY 2005 grant of 10,000 credits made in FY 2006 for the PEP cycle that began in FY 2005. The amounts disclosed in the this column are based upon the number of initial PEP FY 2005 credits granted multiplied by an expected achievement percentage of 75% in accordance with our financial plan estimates, valued at the September 30, 2004 AECOM common stock price of $24.81.

86



Outstanding Equity Awards at Fiscal Year-End 2006

 
   
   
   
   
   
  Stock Awards(2)
 
   
   
   
   
   
   
   
   
  Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares,
Units or
Other Rights that
Have Not Vested
($)

 
  Option Awards(1)
   
   
  Equity Incentive Plan Awards:
Number of
Unearned Shares,
Units or Other Rights that Have Not Vested
(#)

Name and Principal Position
  Number of Securities Underlying Unexercised Options Exercisable
(#)

  Number of Securities Underlying Unexercised Options Unexercisable
(#)

  Equity Incentive Plan Awards:
Number of Securities Underlying Unexercised Unearned Options
(#)

  Option Exercise Price
($)

  Option Expiration Date
  Number of Shares or Units that Have Not Vested
(#)

  Market Value Shares or Units that Have Not Vested
($)

John M. Dionisio
President and Chief Executive Officer
  10,000
25,000
30,000
15,000
25,000
20,000
50,000
50,000
  0
0
0
0
0
0
0
0
  0
0
0
0
0
0
0
0
  $
$
$
$
$
$
$
$
8.30
9.98
10.91
13.68
15.68
16.72
19.51
20.78
  08/22/2007
08/20/2008
08/19/2009
11/14/2007
11/21/2009
11/15/2008
11/20/2010
12/02/2011
  0   $ 0   PEP 05 - 20,829
PEP 06 - 96,238
  PEP 05 - $   591,542
PEP 06 - $2,733,151

Richard G. Newman
Chairman

 

35,000
50,000
60,000
50,000
150,000
50,000
180,000
75,000

 

0
0
0
0
0
0
0
0

 

0
0
0
0
0
0
0
0

 

$
$
$
$
$
$
$
$

8.30
9.98
10.91
13.68
15.68
16.72
19.51
20.78

 

08/22/2007
08/20/2008
08/19/2009
11/14/2007
11/21/2009
11/15/2008
11/20/2010
12/02/2011

 

0

 

$

0

 

PEP 05 - 31,243
PEP 06 - 57,045

 

PEP 05 - $   887,313
PEP 06 - $1,620,085

James R. Royer
Executive Vice President and Chief Operating Officer

 

10,000
15,000
15,000
10,000
20,000
20,000
25,000

 

0
0
0
0
0
0
0

 

0
0
0
0
0
0
0

 

$
$
$
$
$
$
$

8.30
9.98
10.91
13.68
15.68
16.72
19.51

 

08/22/2007
08/20/2008
08/19/2009
11/14/2007
11/21/2009
11/15/2008
11/20/2010

 

0

 

$

0

 

PEP 05 -  7,290
PEP 06 - 13,947

 

PEP 05 - $   207,040
PEP 06 - $   396,109

Michael S. Burke
Executive Vice President and Chief Corporate Officer

 

10,000

 

0

 

0

 

$

24.81

 

10/03/2012

 

0

 

$

0

 

PEP 05 -  5,624
PEP 06 -  9,415

 

PEP 05 - $   159,731
PEP 06 - $   267,373

Francis S. Y. Bong
Chairman Asia

 

25,000
25,000
25,000
25,000

 

0
0
0
0

 

0
0
0
0

 

$
$
$
$

13.68
15.68
16.72
19.51

 

11/14/2007
11/21/2009
11/15/2008
11/20/2010

 

0

 

$

0

 

PEP 05 -  7,290
PEP 06 - 10,461

 

PEP 05 - $   207,040
PEP 06 - $   297,082

Glenn R. Robson
Senior Vice President and Chief Financial Officer

 

50,000
20,000

 

0
0

 

0
0

 

$
$

17.58
19.51

 

08/22/2009
11/20/2010

 

0

 

$

0

 

PEP 05 -  5,207
PEP 06 -  9,415

 

PEP 05 - $   147,886
PEP 06 - $   267,373

(1)
All outstanding stock options as of September 28, 2006 were fully vested by the AECOM Board in FY 2006.

(2)
In FY 2006, the Compensation and Organization Committee, with approval from the Board, determined that the payment terms for outstanding FY05 PEP and FY06 PEP awards would be modified, as described in footnote 1 to the "Grants of Plan-based Awards" table. The results of the FY 2005 PEP cycle and FY 2006 PEP cycle were determined through the end of FY 2006.

87



Options Exercises and Stock Vested for Fiscal Year 2006

 
  Option Awards
  Stock Awards(1)
Name and Principal Position

  Number of Shares Acquired on Exercise (#)
  Value Realized
on Exercise ($)

  Number of Shares Acquired on Vesting ($)
  Value Realized
on Vesting ($)

John M. Dionisio
President and Chief Executive Officer
  15,000   $ 253,800   PEP 05 - 14,586
PEP 06 - 20,881
  PEP 05 - $414,229
PEP 06 - $593,024

Richard G. Newman
Chairman

 

50,000

 

$

846,000

 

PEP 05 - 21,878
PEP 06 - 12,377

 

PEP 05 - $621,343
PEP 06 - $351,517

James R. Royer
Executive Vice President and Chief Operating Officer

 

40,000
10,000

 

$
$

712,000
169,200

 

PEP 05 -  5,105
PEP 06 -  3,026

 

PEP 05 - $144,980
PEP 06 - $  85,946

Michael S. Burke
Executive Vice President and Chief Corporate Officer

 

0

 

$

0

 

PEP 05 -  2,188
PEP 06 -  2,043

 

PEP 05 - $  62,134
PEP 06 - $  58,013

Francis S. Y. Bong
Chairman Asia

 

0

 

$

0

 

PEP 05 -  5,105
PEP 06 -  2,270

 

PEP 05 - $144,980
PEP 06 - $  64,459

Glenn R. Robson
Senior Vice President and Chief Financial Officer

 

0

 

$

0

 

PEP 05 -  3,646
PEP 06 -  2,043

 

PEP 05 - $103,557
PEP 06 - $  58,013

(1)
In FY06, the Compensation and Organization Committee, with approval from the Board, determined that the payment terms for outstanding FY05 PEP and FY06 PEP awards would be modified, as described in footnote 1 to the "Grants of Plan-based Awards" table. The results of the 2005 PEP cycle and 2006 PEP cycle were determined through the end of FY06.

88



Pension Benefits for Fiscal Year 2006

Name and Principal Position

  Plan Name
  Number of Years Credited Service
(#)

  Present Value of Accumulated Benefits
($)(1)

  Payments During
Last Fiscal Year
($)


John M. Dionisio
President and Chief Executive Officer

 

AECOM Technology Corporation Pension Plan(2)

 

19.5000

 

$

133,718

 

0

 

 

AECOM Technology Corporation Management Supplemental Executive Retirement Plan(3)

 

19.5000

 

$

104,286

 

0

 

 

1992 AECOM Technology Corporation Supplemental Executive Retirement Plan(4)

 

19.5000

 

$

1,664,293

 

0

Richard G. Newman
Chairman

 

AECOM Technology Corporation Pension Plan

 

29.2500

 

$

969,552

 

0

 

 

AECOM Technology Corporation Management Supplemental Executive Retirement Plan

 

29.2500

 

$

149,344

 

0

James R. Royer
Executive Vice President and Chief Operating Officer

 

AECOM Technology Corporation Pension Plan

 

10.4167

 

$

29,412

 

0

 

 

AECOM Technology Corporation Management Supplemental Executive Retirement Plan

 

10.4167

 

$

91,159

 

0

 

 

1996 AECOM Technology Corporation Supplemental Executive Retirement Plan(5)

 

10.4167

 

$

781,129

 

0

Michael S. Burke
Executive Vice President and Chief Corporate Officer

 

 

 

0

 

 

0

 

0

Francis S. Y. Bong
Chairman Asia

 

 

 

0

 

 

0

 

0

Glenn R. Robson
Senior Vice President and Chief Financial Officer

 

 

 

0

 

 

0

 

0

Messrs. Robson, Burke and Bong are not eligible for any of the AECOM Pension Plans.

(1)
Present Value of Accumulated Benefits ($)—Liabilities shown in this table are computed using the projected unit credit method reflecting average salary and service as of fiscal year end 2006. The material assumptions, except the retirement assumption, used to determine these liabilities can be located in note 9 to our consolidated financial statements found elsewhere in this prospectus. The retirement assumption was based on the respective plans' normal retirement age.

(2)
AECOM Technology Corporation Pension Plan—The plan's benefit formula is integrated with Social Security and is based on the participant's years of service for the Company and "Final Average Compensation." Effective April 1, 2004, compensation for use in determining the Final Average Compensation was limited to the participant's highest annual compensation for any calendar year during the period beginning January 1, 1994 and ending December 31, 2003. Compensation is further limited to the applicable Internal Revenue Code section 401(a)(17) limit. The plan benefit is limited to the applicable Internal Revenue Code section 415(b) limit. Only employees hired before April 1, 1998 are eligible to participate in the plan. In addition, eligibility for the plan occurs no later than the completion of one year of service. Normal retirement age is 65.

89


(3)
AECOM Technology Corporation Management Supplemental Executive Retirement Plan—The plan's benefit formula is integrated with Social Security and is based on the participant's years of service for the Company and Final Average Compensation. Effective April 1, 2004, compensation for use in determining the Final Average Compensation was limited to the participant's highest annual compensation for any calendar year during the period beginning January 1, 1994 and ending December 31, 2003. Compensation is further limited to the applicable Internal Revenue Code section 401(a)(17) limit. The plan benefit is limited to the applicable Internal Revenue Code section 415(b) limit. The participant's benefit under this plan is equal to the participant's Total AECOM Pension Plan Benefit minus the benefit payable to the participant under the AECOM Technology Corporation Pension Plan. Only employees hired before April 1, 1998 are eligible to participate in the plan. In addition, eligibility for the plan occurs no later than the completion of one year of service and the participant has to be a member of a select group of management or highly compensated employees, is an officer, is eligible for the AECOM Technology Corporation Incentive Compensation Plan and has been selected by the Compensation and Organization Committee to participate in the plan. Normal retirement age is 65. Early retirement age is the first day of any month after age 55, provided the participant has earned five years of service. Compensation is the participant's salary, plus sick pay, overtime pay, shift premiums, contract completion bonuses, incentive compensation bonuses, severance pay paid within 30 days of termination of employment, vacation pay, pre-tax contributions made on the participant's behalf to a Internal Revenue Code Section 125 cafeteria plan and pre-tax contributions to the Retirement and Savings Plan under Internal Revenue Code Section 401(k).

(4)
1992 AECOM Technology Corporation Supplemental Executive Retirement Plan—The plan's benefit formula is integrated with Social Security and is based on the participant's years of service for the Company and Final Average Compensation. Effective April 1, 2004, compensation for use in determining the Final Average Compensation was limited to the participant's highest annual compensation for any calendar year during the period beginning January 1, 1994 and ending December 31, 2003. The participant's benefit under this plan is equal to the participant's Unlimited AECOM Pension Plan benefit minus the benefit payable to the participant under the AECOM Technology Corporation Management Supplemental Executive Retirement Plan and the AECOM Technology Corporation Pension Plan. Only employees hired before April 1, 1998 are eligible to participate in the plan. In addition, eligibility for the plan occurs when the participant is a member of a select group of management or highly compensated employees, has completed at least five years of Service, is at least 50 years old and has been selected by the Board of Directors to participate in the plan. Normal retirement age is 62, provided the participant has been a participant for 36 months. Early retirement age is the first day of any month after age 55, provided the participant has earned three years of service. Compensation is the participant's salary, plus sick pay, overtime pay, shift premiums, contract completion bonuses, incentive compensation bonuses, severance pay paid within 30 days of termination of employment, vacation pay, pre-tax contributions made on the participant's behalf to a Internal Revenue Code Section 125 cafeteria plan and pre-tax contributions to the Retirement and Savings Plan under Internal Revenue Code Section 401(k).

(5)
1996 AECOM Technology Corporation Supplemental Executive Retirement Plan—The plan's benefit formula is integrated with Social Security and is based on the participant's years of service for the Company and Final Average Compensation. Effective April 1, 2004, compensation for use in determining the Final Average Compensation was limited to the participant's highest annual compensation for any calendar year during the period beginning January 1, 1994 and ending December 31, 2003. The participant's benefit under this plan is equal to the participant's Unlimited AECOM Pension Plan benefit minus the benefit payable to the participant under the AECOM Technology Corporation Management Supplemental Executive Retirement Plan and the AECOM Technology Corporation Pension Plan. Only employees hired before April 1, 1998 are eligible to participate in the plan. In addition, eligibility for the plan occurs when the participant is a member of a select group of management or highly compensated employees, has completed at least five years of service, is at least 50 years old, has a date of hire on or after March 1, 1996 and has been selected by the Board of Directors to participate in the plan. Normal retirement age is 62, provided the participant has been a participant for 36 months. Early retirement age is the first day of any month after age 55, provided the participant has earned three years of service. Compensation is the participant's salary, plus sick pay, overtime pay, shift premiums, contract completion bonuses, incentive compensation bonuses, severance pay paid within 30 days of termination of employment, vacation pay, pre-tax contributions made on the participant's behalf to a Internal Revenue Code Section 125 cafeteria plan and pre-tax contributions to the Retirement and Savings Plan under Internal Revenue Code Section 401(k).

90



Nonqualified Deferred Compensation for Fiscal Year 2006

Name and Principal Position

  Executive Contributions in Last FY ($)(1)
  Registrant Contributions in Last FY ($)(2)
  Aggregate
Earnings
in Last FY ($)(3)

  Aggregate Withdrawals/ Distributions
($)(4)

  Aggregate Balance
at Last
FYE ($)(5)

John M. Dionisio
President and Chief Executive Officer
  $ 285,080   $ 51,494   $ 452,908   $ (706 ) $ 3,653,055

Richard G. Newman
Chairman

 

$

303,756

 

$

52,156

 

$

1,830,737

 

$

(701

)

$

14,535,060

James R. Royer
Executive Vice President and Chief Operating Officer

 

$

70,294

 

$

12,833

 

$

582,940

 

$

(217

)

$

4,619,241

Michael S. Burke
Executive Vice President and Chief Corporate Officer

 

$

0

 

$

296,749

(6)

$

15,477

 

$

0

 

$

311,666

Francis S. Y. Bong(7)
Chairman Asia

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

Glenn R. Robson
Senior Vice President and Chief Financial Officer

 

$

30,504

 

$

5,491

 

$

98,541

 

$

(229

)

$

779,995

(1)
Consists of FY 2006 employee contributions to the Stock Purchase Plan (SPP). As of September 30, 2006, participants were allowed to defer the same type of compensation into the SPP as could be deferred into the qualified AECOM Technology Corporation Retirement & Savings Plan (RSP). Participants could defer up to 50% of their base pay and 100% of any bonus they received into the SPP, which contributions were credited to the participant's account under the SPP as a number of common stock units based on the fair market value of the Company's common stock, as determined by the most recent valuation by an independent valuation firm for the then most recently completed fiscal quarter. As of September 30, 2006, participants in the SPP were provided an 18% company match, credited in the form of additional common stock units, on all contributions to the plan, which match is 100% vested after three years of service with the Company. As of September 30, 2006, the only distribution option under the SPP was a lump-sum in-kind distribution at termination of employment of a number of shares of the Company's common stock equal to the number of common stock units credited to the participant's account at the time of such termination of employment. As of September 30, 2006, the shares of common stock distributed were subject to repurchase by the Company after the participant's employment terminates, pursuant to the Company's Bylaws.

(2)
Consists of FY 2006 Company match contributions to the SPP. The values in this column are also represented in the All Other Compensation column of the Summary Compensation Table above.

(3)
This is the difference in the SPP beginning balance as of October 1, 2005 and the SPP ending balance as of September 29, 2006, less any activity in the plan during the 2006 fiscal year. The values in this column are not represented in the Summary Compensation Table.

(4)
Consists of SPP Company match stock units that were sold in FY 2006 to cover the taxes on the SPP company match earned in calendar year 2005.

(5)
Consists of the September 29, 2006 SPP ending balance, including SPP Senior Executive Equity Investment Plan (SEEIP) company match shares.

(6)
Includes a company match of $54,000 contributed to the SPP based on an 18% match on a $300,000 SEEIP loan note issued on October 3, 2005.

(7)
As our Chairman, Asia and a non-U.S. resident, Mr. Bong is not eligible for the SPP.

91



Directors Compensation for Fiscal Year 2006

Name and Principal Position

  Fees Earned or Paid in Cash ($)(1)
  Stock Awards ($)
  Option Awards ($)(2)
  Non-Equity Incentive Plan Compensation ($)
  Change in Pension Value & Non-Qualified Deferred Compensation Earnings
  All Other Compensation ($)(3)
  Total ($)
H. Frederick Christie(4)   $ 66,000   $ 0   $ 48,600   $ 0   $ 0   $ 13,503   $ 128,103
John W. Downer(7)   $ 44,500   $ 0   $ 48,600   $ 0   $ 0   $ 13,335   $ 106,435
James H. Fordyce(5)   $ 0   $ 0   $ 0   $ 0   $ 0   $ 5,000   $ 5,000
S. Malcolm Gillis(8)   $ 55,000   $ 0   $ 48,600   $ 0   $ 0   $ 12,809   $ 116,409
Linda Griego   $ 55,000   $ 0   $ 48,600   $ 0   $ 0   $ 12,862   $ 116,462
Robert J. Lowe(9)   $ 58,500   $ 0   $ 48,600   $ 0   $ 0   $ 9,741   $ 116,841
William G. Ouchi   $ 55,500   $ 0   $ 48,600   $ 0   $ 0   $ 5,802   $ 109,902
William P. Rutledge   $ 64,500   $ 0   $ 48,600   $ 0   $ 0   $ 9,024   $ 122,124
Lee D. Stern(6)   $ 0   $ 0   $ 0   $ 0   $ 0   $ 0   $ 0

Messrs. Dionisio, Newman and Bong are employee directors and do not receive separate compensation (i.e. annual retainer fees, board and committee meeting fees) for participating as Board members.

(1)
These amounts include annual retainer fees and board and committee meeting fees earned in FY 2006. The following non-employee directors deferred amounts from their retainer fees and board and committee meeting fees paid in FY 2006 into the Stock Purchase Plan (SPP): Christie—$46,750, Gillis—$32,000, Griego—$41,000, Lowe—$22,750 and Rutledge—$49,000.

(2)
Each non-employee director, excluding Fordyce and Stern as designees of the Class F and Class G stockholders, received an option to purchase 5,000 shares of common stock granted on March 2, 2006 with an exercise price of $25.07 per share. These awards are valued at a Black-Scholes value of $9.72 per share as of the grant date. This Black-Scholes valuation includes the following assumptions: Time to Expiration of 7 years, which matches the life of the option as AECOM has historically not experienced early exercise of options by its executives; Risk Factor Rate of 4.66%, which is the market yield on U.S. Treasury securities at 7-year constant maturity as of October 3, 2005; and Volatility of 0.25, which considers volatility of publicly-traded comparable company stocks as of the valuation date.
(3)
These amounts include company match on deferred pre-tax contributions from fees earned during FY 2006 into the SPP, Company matching contributions to chartable organizations on behalf of the non-employee directors and spousal travel for non-employee directors.

(4)
Mr. Christie exercised options to purchase 1,000 shares of common stock on 2/13/2006 with a realized gain of $17,800 and exercised options to purchase 500 shares of common stock on 7/25/2006 with a realized gain of $9,765.

(5)
Mr. Fordyce is the designated director for the holders of Class G preferred stock and is not paid a retainer by AECOM.

(6)
Mr. Stern is the designated director for the holders of Class F preferred stock and is not paid a retainer by AECOM.

(7)
Mr. Downer retired from the AECOM Board of Directors on December 1, 2006.

(8)
Mr. Gillis exercised options to purchase 1,500 shares of common stock on 2/14/2006 with a realized gain of $17,085.

(9)
Mr. Lowe exercised options to purchase 1,000 shares of common stock on 2/13/2006 with a realized gain of $17,800 and exercised options to purchase 500 shares of common stock on 3/13/2006 with a realized gain of $8,460.

        We established our AECOM Technology Corporation 2006 Stock Incentive Plan effective October 1, 2006 in order to promote the success of AECOM by providing additional long-term incentives for high levels of performance and for significant efforts to improve the financial performance of AECOM. Persons eligible to receive awards under the 2006 Stock Incentive Plan include key employees and officers of AECOM and its subsidiaries and to members of our Board of Directors who are not our employees. The 2006 Stock Incentive Plan replaced our previously existing equity compensation plans, the AECOM Technology Corporation 2000 Stock Incentive Plan and the Amended and Restated AECOM Technology Corporation Stock Incentive Plan for Non-Employee

92


Directors. No additional awards will be granted under either the AECOM Technology Corporation 2000 Stock Incentive Plan or the Amended and Restated AECOM Technology Corporation Stock Incentive Plan for Non-Employee Directors, however, the shares that remained available for issuance under those plans at the time the 2006 Stock Incentive Plan was adopted were absorbed by and are available for issuance under the 2006 Stock Incentive Plan.

        The 2006 Stock Incentive Plan authorizes stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, incentive bonuses and performance-based awards. We believe the various forms of awards that may be granted under the 2006 Stock Incentive Plan give us the flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Generally, an option or stock appreciation right will expire, or other award will vest, not more than ten years after the date of grant.

        The 2006 Stock Incentive Plan can be administered by our Board of Directors or by one or more committees appointed by our Board of Directors. Currently the Compensation and Organization Committee of our Board of Directors administers the 2006 Stock Incentive Plan.

        The current aggregate share limit under the 2006 Stock Incentive Plan is 10,750,000 shares and the maximum number of shares subject to awards which may be granted to any individual during any calendar year is 2,000,000. At December 31, 2006, there were 6,078,603 shares available for issuance under this Plan. At December 31, 2006, there were 232,510 options outstanding under the 2006 Stock Incentive Plan with a weighted average exercise price of $28.40 per share. The maximum number of shares available for issuance under the 2006 Stock Incentive Plan will automatically increase on October 1, 2007 and on the first day of each fiscal year thereafter for nine more years, by the least of: (i) 5% of the our fully diluted shares outstanding as of the last day of the preceding fiscal year; (ii) 3,000,000 shares, or (iii) a number determined by the Board of Directors or the plan's administrator.

        Stock options and SARs granted under the 2006 Stock Incentive Plan have an exercise price equal to the fair market value of a share of our common stock on the later of the date of approval of the award by the Compensation and Organization Committee and the identification of the individual grantee, but in no event shall the exercise price be less than the fair market value of a share on the date of grant. An option may either be an Incentive Stock Option or a Nonqualified Stock Option. Incentive Stock Options are also subject to more restrictive terms and are limited in amount by the Internal Revenue Code and the Plan. Full payment for shares purchased on the exercise of an option must be made at the time of such exercise in a manner approved by the Committee.

        Upon a participant's retirement after age 65, retirement at age 55 with approval from Compensation and Organization Committee, death or total disability, or upon the occurrence of other events specified in the 2006 Stock Incentive Plan and summarized below, the Compensation and Organization Committee may provide that each option and SAR will become immediately vested and exercisable, each award of restricted stock will immediately vest free of restrictions and each performance share award will become payable to the holder of the award.

        Our Compensation and Organization Committee may amend or terminate the 2006 Stock Incentive Plan at any time. In addition, the Compensation and Organization Committee may generally amend or modify the 2006 Stock Incentive Plan from time to time. Stockholder approval for an amendment will generally not be obtained unless required by applicable law or deemed necessary or advisable by our Board of Directors. Unless previously terminated by our Compensation and Organization Committee, the Plan will terminate on September 30, 2016. Outstanding awards may be amended, however, only with the consent of the holder if the amendment alters or impairs the rights of the holder.

93


        Upon our dissolution or liquidation, or if we are not the surviving entity as a result of a reorganization, merger or other consolidation with or into another corporation, the 2006 Stock Incentive Plan and all outstanding awards will terminate unless the successor corporation has provided for the assumption or substitution of the outstanding awards.

        In February 2000, we adopted the 2000 Stock Incentive Plan that replaced our Stock Incentive Plan first adopted in 1990. The 2000 Stock Incentive Plan authorizes the issuance of stock options, stock appreciation rights (SARs), restricted stock and performance share awards to officers and key employees of AECOM and our subsidiaries and certain consultants and advisors to AECOM or any of our subsidiaries. The maximum number of shares authorized for issuance under the 2000 Stock Incentive Plan is 7,000,000. The remaining shares available for issuance under this plan as of October 1, 2006 were assumed into the 2006 Stock Incentive Plan.

        Stock options granted under the 2000 Stock Incentive Plan have an exercise price equal to the fair market value of a share of our common stock on the later of the date of approval of the award by the Compensation and Organization Committee and the identification of the individual grantee, but in no event is the exercise price be less than the fair market value of a share on the date of grant. Generally, an option granted under the 2000 Stock Incentive Plan will expire not more than ten years after the date of grant.

        At December 31, 2006, there were 854,850 options outstanding under the Stock Incentive Plan with a weighted average exercise price of $10.02 per share and 3,436,712 options outstanding under the 2000 Stock Incentive Plan with a weighted average exercise price of $18.38 per share.

        On July 9, 2002, we adopted an amended and restated Stock Incentive Plan for Non-Employee Directors. The Stock Incentive Plan for Non-Employee Directors authorizes the issuance of options to purchase up to 250,000 shares of our common stock to directors who are not our employees or who do not own more than 5% of our outstanding voting securities. This plan terminated on May 25, 2005, although options granted prior to that date will remain exercisable until their respective expiration dates.

        At December 31, 2006, there were 112,525 options outstanding under the Stock Incentive Plan for Non-Employee Directors with a weighted average exercise price of $17.79 per share.

        The 2006 Stock Incentive Plan for Non-Employee Directors (the "Directors Plan") authorizes the issuance of options to purchase up to 250,000 shares of our common stock to directors who are not our employees or who do not own more than 5% of our outstanding voting securities.

        The Directors Plan is administered by our Board of Directors or by one or more committees appointed by our Board of Directors. Currently the Compensation and Organization Committee of our Board of Directors administers the Directors Plan.

        Under this plan, new directors will be granted options to purchase 5,000 shares of our common stock with an exercise price equal to the fair market value of our common stock on the date of grant. On the first business day following our annual meeting of stockholders, each director will be granted options to purchase 5,000 shares of our common stock with an exercise price that is equal to the fair market value of our common stock on the date of grant.

94



        Options vest six months after date of grant. Revaluing of options is disallowed under this plan. Shares subject to options that have expired will become available for grant again under the Directors Plan. During fiscal year 2006, stock options in respect of 35,000 shares were granted to seven of our directors with a weighted average exercise price of $25.07 per share.

        The remaining shares available for issuance under this plan as of October 1, 2006 were assumed into the 2006 Stock Incentive Plan.

        We established a Performance Earnings Program, or PEP, in December 2004 to issue incentives (pursuant to either our 2000 Stock Incentive Plan and 2006 Stock Incentive Plan) to our officers and key employees in lieu of stock options. Participants can earn up to 100% of the granted credits over a three year performance period. The performance periods for the fiscal 2005 and fiscal 2006 grants are fiscal years 2005, 2006 and 2007 and 2006, 2007 and 2008, respectively. The PEP is described in more detail in the "Compensation Discussion and Analysis" section of this prospectus.

        Most full and part-time AECOM employees may purchase AECOM common stock through plans developed to comply with local laws and regulations. The largest such stock investment plan is in the United States, which we refer to as our Retirement & Savings Plan, and, together with all our non-U.S. plans, comprise the AECOM Global Stock Program. The Global Stock Program enables our employees to purchase our common stock through payroll deductions each pay period and contributions from year-end bonuses. After holding AECOM common stock for five years, participants may diversify some or all of those holdings into cash or other investment funds under a diversification program. Employee stock plans are currently established in the United States, Hong Kong, United Kingdom, Australia, New Zealand, United Arab Emirates, Qatar, Canada and Singapore.

        In the United States, the Retirement & Savings Plan is a tax-qualified 401(k) plan. During the year, highly compensated employees (generally speaking, employees who earned more than $95,000 in fiscal 2006) may be disqualified from fully participating in the Retirement & Savings Plan. Due to this restriction, we have established a non-qualified plan, the Non-Qualified Stock Purchase Plan, to enable those highly compensated employees to defer compensation that they might otherwise have contributed to the Retirement & Savings Plan.

        In the third fiscal quarter of fiscal year 2006, we implemented an employee stock plan in Canada. This plan, the UMA Group Ltd Employee Stock Purchase Plan, or UMA ESPP, was adopted as a result of our acquisition of UMA Group in Canada. The UMA ESPP is administered by our Board of Directors and up to 7,000,000 shares of our common stock may be granted under the plan to eligible employees in Canada. We provide a stock match in the form of common stock at a percentage (currently 18%) equal to the stock match percentage under our Global Stock Incentive Plan on all purchases made under this plan. The company stock match will have a three year vesting period, and prior service with UMA will count towards the three year vesting period. None of our current directors or executive officers or any other employees eligible to participate in any other AECOM stock purchase plan will be eligible to participate in the UMA ESPP.

        In connection with our September 2005 acquisition of Tiger Acquisition Corp. and its subsidiaries including ENSR International Corp., AECOM agreed to establish the ENSR 2005 Stock Purchase Plan, or ENSR SPP, a non-qualified plan. The ENSR SPP is administered by our Board of Directors or by

95


one or more committees appointed by our Board of Directors. Under the terms of the plan, our Board of Directors, or a committee appointed by our Board, will allow those employees of Tiger Acquisition Corp. and its subsidiaries who were shareholders at the time of acquisition to purchase shares of our common stock at the fair market value of our common stock for a period of six months after the adoption of the plan. Currently, we will also provide an 18% stock match on all purchases made under this plan by crediting such employee's account under one of AECOM's Employee Investment Plans described above for U.S. employees and issuing shares for such stock match directly to non-U.S. employees.

        In connection with our September 2006 acquisition of Cansult Limited, AECOM agreed to establish the Cansult Maunsell Merger Investment Plan or MIP, a non-qualified plan. The MIP is administered by our Board of Directors or by one or more committees appointed by our Board of Directors. Under the terms of the plan, our Board of Directors, or a committee appointed by our Board, will allow those employees of Cansult Limited who were stockholders at the time of acquisition to purchase shares of our AECOM Global Holdings, Ltd. common stock at the fair market value of our common stock for a period of six months after the adoption of the plan.

        In anticipation of future acquisitions, AECOM has established the Equity Investment Plan or EIP, a non-qualified plan. The EIP is administered by our Board of Directors or by one or more committees appointed by our Board of Directors. Under the terms of the plan, our Board of Directors, or a committee appointed by our Board, will allow those employees who join AECOM via mergers and acquisitions that were shareholders at the time of acquisition to purchase shares of our common stock at the fair market value of our common stock for a period of one month after the closing of the transaction.

        A number of our employees participate in pension plans maintained by us and our overseas subsidiaries. In the United States, certain employees participate in the AECOM Pension Plan, a defined benefit plan that was effective on October 1, 1989. Depending on the participant's years of service to AECOM, the pension benefits will range from 26% to 30.5% of the employee's final capped average monthly compensation plus an additional 11% to 12.5% of the employee's final capped average monthly compensation in excess of specified Social Security base amounts. As of April 1, 2004, employees' pensionable compensation was capped at the employee's highest compensation for one full calendar year from 1994 through 2003. The employee's final average compensation will continue to increase until the participant's average compensation reaches the compensation cap. Pension benefits will generally be reduced for participants with less than 25 years of service as required by plan rules. Employee contributions to the Pension Plan of up to 1.5% of compensation were required prior to April 1, 1998.

        On April 1, 1998, we amended our Investment Plan (now part of the Retirement & Savings Plan) to add what we refer to as a 401(k) pension component. This 401(k) pension component generally replaced the AECOM Pension Plan. New employees are not permitted to participate in the AECOM Pension Plan and, as described below, benefits under the 401(k) pension component reduce the AECOM Pension Plan benefits for existing AECOM Pension Plan participants. Employees are allowed to make pre-tax or after-tax contributions of 0.5%, 1.0% or 1.5% of their compensation to this 401(k) pension component. We will match dollar for dollar any such contributions and our matching contributions will vest after three years of service (as defined in the Retirement & Savings Plan).

96



        We also amended the AECOM Pension Plan, effective July 1, 1998, to provide that those highly compensated employees who receive bonuses under our incentive compensation program cease earning benefits under the AECOM Pension Plan and instead earn identical benefits under a non-qualified plan, the Management Supplemental Executive Retirement Plan, or MSERP. The MSERP provides a benefit identical in nature to the AECOM Pension Plan but on an unfunded basis.

        The terms of our Pension Plan, MSERP, and related plans are more fully described in the "Compensation Discussion and Analysis" section of this prospectus.

        Our employees outside the United States participate in a variety of public and private retirement and pension plans, both mandatory and voluntary, which provide various benefit levels.

        In Australia, many of our senior staff participate in the AECOM Australia Superannuation Fund which was established July 1, 1965. This plan provides a lump sum defined benefit (at the rate of either 18.5% or 16.5% of the employee's final average annual compensation per year of service, capped at 7.0 times and 6.6 times the employee's average annual compensation, respectively) to a small closed group of employees and lump sum defined contribution benefits to the remainder. In the report on the most recent actuarial valuation at July 1, 2004, the actuary stated that the plan was in a sound financial position.

        In Hong Kong, most of our employees participate in a Defined Contribution Scheme established in December 2000 with employee contributions ranging from 3% to 6.5% of salary plus an employer match of 150% of the first 1% to 4% of employee contributions or for designated participants up to 23.5% of salary.

        We maintain three principal defined benefit pension schemes in the United Kingdom: the Maunsell Ltd. Pension Scheme, the Oscar Faber Pension Fund and the Bullen Pension Plan. The schemes were closed to new participants in 2001, 1999 and 2002, respectively. In all schemes, increases in the pensionable salary are restricted to the annual increase in inflation, capped at 5% per annum, thus severing the link with final salary. The three year average of the pensionable salary, or Final Pensionable Salary, at retirement is utilized to calculate the annual pension. Participants generally accrue 1/60 of Final Pensionable Salary for each year of pensionable service with an option to choose up to 25% of this benefit as a tax-free cash sum at retirement. All benefits payable are subject to overriding U.K. legislation and are currently restricted to a maximum of 40 years pensionable service (or less for certain participants eligible for higher accrual rates) for the calculation of the pension at retirement.

97



CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        We have adopted a written related party transaction policy, which covers transactions between us and our directors, executive officers, 5% or greater stockholders and parties related to the foregoing, such as immediate family members and entities they control. The policy requires that any such transaction be considered and approved by our Audit Committee prior to entry into such transaction. In reviewing such transactions, the policy requires the Audit Committee to consider all of the relevant facts and circumstances available to the Audit Committee, including (if applicable) but not limited to the benefits to the Company, the availability of other sources for comparable products or services the terms of the transaction and the terms available to unrelated third parties or to employees generally.

        Under the policy, if we should discover related party transactions that have not been approved, the Audit Committee will be notified and will determine the appropriate action, including ratification, rescission or amendment of the transaction.

        Mr. Ronald Yamiolkoski is employed by our subsidiary DMJM+Harris as an Associate Vice President and he is the brother-in-law of Mr. Richard Newman, our Chairman. Mr. Yamiolkoski has no reporting responsibility to Mr. Newman and in our fiscal years ended September 30, 2004, 2005 and 2006, Mr. Yamiolkoski received compensation from DMJM+Harris of approximately $129,000, $155,000 and $157,000, respectively. The employment of Mr. Yamiolkoski was entered into more than 25 years ago, prior to the adoption of our related party transaction policy and has since been ratified by the Audit Committee.

        Two of our subsidiaries have performed design and other services in the ordinary course of business for Lowe Enterprises, which is affiliated with Robert Lowe, one of our directors. Our subsidiaries received fee payments from Lowe Enterprises in our fiscal years ended September 30, 2005 and 2006 in the amounts of approximately $470,000 and $800,000, respectively. In addition, one of our subsidiaries jointly pursued a project with an affiliate of Lowe Enterprises where our subsidiary received payments for design and other services from the project client (which was not affiliated with Lowe Enterprises) in our fiscal years ended 2004, 2005 and 2006 in the amounts of approximately $260,000, $1,700,000 and $610,000, respectively. The transactions with Lowe Enterprises have been ratified by our Audit Committee.

        Entities affiliated with GSO Capital Partners and J.H. Whitney Capital Partners, LLC were the primary investors in our February 2006 sale of approximately $235 million of our Class F and Class G convertible preferred stock. Our board members Lee D. Stern and James H. Fordyce are affiliated with GSO Capital and J.H. Whitney, respectively, and have been designated by such investors pursuant to their respective rights under our Restated Certificate of Incorporation as Class F and Class G convertible preferred stockholders to appoint representatives to our board of directors.

        We previously established a Senior Executive Equity Investment Plan, under which we encouraged our senior officers to hold AECOM stock by providing loans to fund the purchases of the stock. As of February 20, 2007, all SEEIP loans have been terminated and repaid. At September 30, 2006, there were SEEIP loans outstanding with in aggregate principal amount of approximately $29.7 million.

98



PRINCIPAL AND SELLING STOCKHOLDERS

        The following table sets forth information regarding the beneficial ownership of our common stock as of December 31, 2006 with respect to:

        Except as otherwise indicated in the footnotes to the table, each stockholder has sole voting and investment power with respect to the shares beneficially owned by such stockholder.

 
  Number of Shares of Common Stock(1) Beneficially Owned Prior to the Offering
   
   
   
 
   
  Number of Shares Beneficially Owned After the Offering
 
  Number of Shares Offered
 
  Number
  Percentage
  Number
  Percentage
5% Securityholders                    
United States Trust Company, N.A.(2)
555 S. Flower Street
Suite 3700
Los Angeles, CA 90071
  11,157,472   29.86 %          
Halifax EES Trustees International Limited(3)
P.O. Box 827, Queensway House, Hilgrove Street
St. Helier, Jersey JE4 OUB
  3,521,637   9.43 %          
CalPERS/PCG Corporate Partners LLC(4)
1200 Prospect, Ste 200
La Jolla, CA 92037
  1,396,091   3.74 %          
GSO Capital Partners LP(5)
280 Park Avenue
11th Floor East Tower
New York, NY 10017
  3,988,831   10.68 %          
J.H Whitney VI, L.P.(6)
130 Main Street
New Canaan, CT 06901
  3,988,831   10.68 %          

Directors and Named Executive Officers

 

 

 

 

 

 

 

 

 

 
John M. Dionisio(7)   586,298   1.56 %          
Richard G. Newman(8)   1,815,261   4.78 %          
Francis S.Y. Bong(9)   783,674   2.09 %          
H. Frederick Christie(10)   56,603   0.15 %          
James H. Fordyce(11)   0   0.00 %          
S. Malcolm Gillis(12)   36,905   0.10 %          
Linda Griego(13)   13,659   0.04 %          
Robert J. Lowe(14)   56,762   0.16 %          
William G. Ouchi(15)   47,500   0.13 %          
William P. Rutledge(16)   52,635   0.14 %          
Lee D. Stern   0   0.00 %          
James R. Royer(17)   501,070   1.34 %          
Michael S. Burke(18)   75,729   0.20 %          
Glenn R. Robson(19)   123,656   0.33 %          
All directors and executive officers as a group (16 persons)   5,246,192   13.46 %          

Selling Stockholders

 

 

 

 

 

 

 

 

 

 

(1)
The common stock holdings listed above includes convertible preferred stock, Class F convertible preferred stock and Class G convertible preferred stock as converted to common stock.

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(2)
United States Trust Company, N.A. acts as trustee with respect to our Retirement & Savings Plan and our Stock Purchase Plan. The number of common shares listed above constitutes shares held as trustee under our Retirement & Savings Plan, which includes 55,938 preferred shares.

(3)
Constitutes shares held by AECOM Global Holdings, Ltd. for the benefit of certain non-U.S. employees who participate in our Global Stock Program where Halifax EES Trustees International acts as trustee with respect to our Global Stock Plan.

(4)
CalPERS/PCG Corporate Partners, LLC is the beneficial owner of 7,000 shares of Class F convertible preferred stock and 7,000 shares of Class G convertible preferred stock. CalPERS/PCG Corporate Partners, LLC is a Delaware limited liability company, whose manager is PCG Corporate Partners Investments LLC. PCG Corporate Partners Investments LLC is wholly owned by Pacific Corporate Group LLC, a Delaware limited liability company. Pacific Corporate Group LLC is wholly owned by Pacific Corporate Group Holdings, LLC, a Delaware limited liability company. Pacific Corporate Group Holdings, LLC is owned by Christopher J. Bower, Timothy Kelleher, Monte Brem, Stephen Moseley, Tara Blackburn, Douglas Meltzer and Pacific Corporate Group Holdings, Inc., which is in turn wholly owned by Christopher J. Bower. Each of PCG Corporate Partners Investments LLC, Pacific Corporate Group LLC, Pacific Corporate Group Holdings, LLC, Christopher J. Bower, Timothy Kelleher, Monte Brem, Stephen Moseley, Tara Blackburn, Douglas Meltzer and Pacific Corporate Group Holdings, Inc. disclaims beneficial ownership of any securities.

(5)
GSO Capital Partners LP is the investment manager for each of GSO Credit Opportunities Fund (Helios), L.P. ("GSO Helios"), GSO Special Situations Overseas Benefit Plan Fund Ltd. ("GSO Overseas Benefit"), GSO Special Situations Overseas Fund Ltd. ("GSO Overseas") and GSO Special Situations Fund LP ("GSO SS" and, together with GSO Helios, GSO Overseas Benefit and GSO Overseas, the "GSO Funds"). Each of GSO Helios (12,945.59504 shares), GSO Overseas Benefit (1,034.176356 shares), GSO Overseas (12,591.0779 shares) and GSO SS (13,429.1507 shares) are the holders of record of our Class F Preferred Stock. As investment manager of the GSO Funds, GSO Capital Partners LP is vested with investment discretion with respect to investments held by the GSO Funds. GSO LLC ("GSO General Partner") is the general partner of GSO Capital Partners LP, and in that capacity, directs the operations of GSO Capital Partners LP. Bennett J. Goodman ("Mr. Goodman"), J. Albert Smith III ("Mr. Smith") and Douglas I. Ostrover ("Mr. Ostrover" and together with Mr. Goodman and Mr. Smith, the "GSO Managing Members") are the managing members of the General Partner, and in that capacity, direct the General Partner's operations. Each of the GSO Funds, GSO Capital Partners LP, General Partner and the Managing Members (collectively, the "GSO Persons") may be deemed a beneficial owners of Class F Preferred Stock. However, the foregoing should not be deemed to constitute an admission that any of the GSO Persons are the beneficial owners of any of Class F Preferred Stock owned by the GSO Funds.

(6)
J.H. Whitney VI, L.P. is the beneficial owner of 40,000 shares of Class G convertible preferred stock. J.H. Whitney VI, L.P.'s general partner is J.H. Whitney Equity Partners VI, LLC.

(7)
Common stock includes 225,000 shares subject to options exercisable prior to March 1, 2007 and 135,551 common stock units held in our Stock Purchase Plan.

(8)
Common stock includes 650,000 shares subject to options exercisable prior to March 1, 2007 and 515,630 common stock units held in our Stock Purchase Plan.

(9)
Common stock includes 100,000 shares subject to options exercisable prior to March 1, 2007.

(10)
Common stock includes 26,100 shares subject to options exercisable prior to March 1, 2007 and 24,003 common stock units held in our Stock Purchase Plan.

(11)
Securities owned by J.H. Whitney VI, L.P. (JHW VI). Mr. Fordyce is a managing member of J.H. Whitney Equity Partners VI, LLC, the general partner of JHW VI, and has an interest in a limited partner of JHW VI. Mr. Fordyce may be deemed to share voting and dispositive power with respect to such securities. Mr. Fordyce disclaims beneficial ownership of such securities except to the extent of his proportionate interest.

(12)
Common Stock includes 18,600 shares subject to options exercisable prior to March 1, 2007 and 15,926 common stock units held in our Stock Purchase Plan.

(13)
Common Stock includes 10,000 shares subject to options exercisable prior to March 1, 2007 and 3,659 common stock units held in our Stock Purchase Plan.

(14)
Common Stock includes 26,100 shares subject to options exercisable prior to March 1, 2007 and 27,162 common stock units held in our Stock Purchase Plan.

(15)
Common Stock includes 18,000 shares subject to options exercisable prior to March 1, 2007 and 4,500 common stock units held in our Stock Purchase Plan.

(16)
Common Stock includes 23,100 shares subject to options exercisable prior to March 1, 2007 and 26,751 common stock units held in our Stock Purchase Plan.

(17)
Common stock includes 115,000 shares subject to options exercisable prior to March 1, 2007 and 164,910 common stock units held in our Stock Purchase Plan.

(18)
Common stock includes 10,000 shares subject to options exercisable prior to March 1, 2007 and 24,455 common stock units held in our Stock Purchase Plan.

(19)
Common stock includes 70,000 shares subject to options exercisable prior to March 1, 2007 and 27,460 common stock units held in our Stock Purchase Plan.

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DESCRIPTION OF CAPITAL STOCK

        Our certificate of incorporation authorizes us to issue 150,000,000 shares of Common Stock and 8,000,000 shares of preferred stock, or Preferred Stock. Our Board of Directors, without further approval of the stockholders, may establish the powers, preferences, rights, qualifications and limitations, including the dividend rights, dividend rates, conversion rights, conversion prices, voting rights and redemption rights, of any series of Preferred Stock and may authorize the issuance of any such series.

Common Stock

        As of December 31, 2006, we had 150,000,000 authorized shares of common stock, of which 21,858,978 shares were outstanding. Holders of our common stock are entitled to one vote per share on all matters to be voted on by our stockholders. All shares of common stock have equal voting rights.

        Subject to the rights pertaining to any series of preferred stock, in the event of our liquidation, holders of our common stock are entitled to share ratably in our assets legally available for distribution after the payment of our debts. The shares of common stock have no preemptive, subscription, conversion or redemption rights.

        Subject to the rights of the holders of preferred stock, the holders of the common stock are entitled to receive dividends, when, as and if declared by our Board of Directors, from funds legally available for such dividend payments.

Convertible Preferred Stock

        The following is a summary of the material terms of the Convertible Preferred Stock.

        General.    There are 2,500,000 authorized shares of our Convertible Preferred Stock, with a par value and liquidation preference of $100 per share, of which 55,938 shares of our Convertible Preferred Stock were outstanding as of December 31, 2006.

        Dividends.    Holders of the Convertible Preferred Stock are entitled to receive dividends payable in additional shares of Convertible Preferred Stock quarterly at a rate determined by an independent appraiser. This rate is established at a level that the appraiser determines is necessary to ensure that the fair value of the Convertible Preferred Stock will be equal to its liquidation preference. In making this determination, the appraiser considers the creditworthiness of the Company and prevailing market interest rates (i.e., the return on 12-month U.S. Treasury Bills).

        Redemption.    After shares of Convertible Preferred Stock has been outstanding for at least three years, we may redeem such shares at a price equal to 102.5% of the liquidation preference of the shares, plus the payment of any accrued and unpaid dividends to the redemption date. After the Convertible Preferred Stock has been held at least one year, the holder of the shares may convert some or all of the shares to our Common Stock. In any event, at such time as a holder of Convertible Preferred Stock no longer meets the qualifications to be a holder of Employee Stock, the Convertible Preferred Stock held by such holder shall be repurchased by us.

        Liquidation Rights.    In the event of our voluntary or involuntary liquidation, dissolution or winding up, or a change in control, the holders of shares of Convertible Preferred Stock are entitled to receive out of our assets available for distribution to stockholders, on parity with holders of our Class C preferred stock, and before any distribution of assets is made to holders of our Common Stock or of any other shares of our stock ranking as to such a distribution junior to the shares of Convertible Preferred Stock, liquidating distributions in the amount of $100 per share plus accrued and unpaid dividends. After payment of such liquidating distributions, the holders of shares of Convertible

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Preferred Stock will not be entitled to any further participation in any distribution of assets by the Company.

        Voting Rights.    Except as otherwise required by applicable law, the holders of the Convertible Preferred Stock will be entitled to one vote per share on all matters to be voted upon by our common stockholders.

        If the equivalent of six quarterly dividends payable on the Convertible Preferred Stock are in arrears, the number of our directors will be increased by two and the holders of Convertible Preferred Stock, voting as a class with the holders of shares of any other series of preferred stock ranking on a parity with the Convertible Preferred Stock as to dividends and distribution of assets, will be entitled to elect two directors to fill such vacancies. Such right to elect two additional directors will continue until all dividends in arrears have been paid or declared and set apart for payment.

Class F and Class G Convertible Preferred Stock

        As of December 31, 2006, we had 94,000 shares of Class F and Class G convertible preferred stock authorized, all of which were outstanding. Upon the completion of this offering, all then-outstanding shares of our Class F and Class G convertible preferred stock will be converted into common stock at a conversion rate of approximately 99.7 shares of common stock for each share of Class F and Class G convertible preferred stock.

        Registration Rights.    The holders of the Class F and Class G convertible preferred stock have certain registration rights that may result in such holders being able to sell their shares of common stock issued upon conversion of the Class F or Class G convertible preferred stock in a registered offering after an initial public offering of our common stock before other holders of our common stock.

Class C Preferred Stock

        Our Class C preferred stock provides certain voting rights for holders of our common stock units and preferred stock units purchased under our nonqualified Stock Purchase Plan. As of December 31, 2006, we had 200 authorized shares of Class C preferred stock, no par value, authorized, of which 54.317 shares were issued to U.S. Trust Company, N.A., as the trustee of the AECOM Technology Corporation Supplemental Trust, which holds shares on behalf of our employee stockholders. Each share of Class C preferred stock is entitled to 100,000 votes on all matters to be voted on by our holders of common stock, has no right to dividends and has a liquidation and redemption value of $1.00 per share, which will be paid on parity with our Convertible Preferred Stock before any assets are distributed to holders of our common stock upon our voluntary or involuntary liquidation. U.S. Trust Company has sole discretion as to how it votes each share of Class C preferred stock. We may redeem such shares of Class C preferred stock at our election, in whole or in part, at a redemption price equal to the liquidation preference of such shares. The Class C preferred stock is not convertible into common stock.

Class E Preferred Stock

        As of December 31, 2006, we had 20 shares of Class E preferred stock, par value $0 per share, authorized to be issued, of which 5.165 shares were issued to Computershare Trust Company of Canada in its capacity as trustee for UMA Group, Ltd. and UMA RRSPCO Ltd. The shares of Class E preferred stock were issued in connection with our acquisition of the UMA group of companies in September 2004 and provide certain voting rights to the former UMA shareholders. Each share of Class E preferred stock is entitled to 100,000 votes only on certain fundamental matters affecting the Company, such as change of control.

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        The Class E preferred stock has no right to dividends and has a liquidation and redemption value of $1.00 per share, which will be paid before any assets are distributed to holders of our common stock upon our voluntary or involuntary liquidation. We may redeem the Class E preferred stock at any time by paying the redemption value of $1.00 per share. The Class E stock is not convertible into common stock.

Class Y Shares of UMA Group, Ltd. and Class YY Shares of UMA RRSPCO Ltd.

        The Class Y and Class YY shares were issued to former shareholders of the UMA group of companies in connection with our acquisition of the UMA group of companies in September 2004. As of September 30, 2006, there were 440,344 and 102,375 shares outstanding of Class Y and YY shares, respectively.

        The Class Y and YY shares are not entitled to vote with the common stock of AECOM. AECOM, however, has issued to Computershare Trust Company of Canada one share of Class E preferred stock for each 100,000 shares of Class Y or Class YY stock. As described above, the Class E preferred stock indirectly provides each holder of Class Y and YY shares voting rights upon certain fundamental events of AECOM.

        The Class Y and YY shares will be entitled to dividends when and if dividends are declared on the common stock of AECOM and in the same amount as the dividends declared on the common stock of AECOM, subject to the rights of AECOM's preferred stock currently outstanding or that may hereafter be issued.

Common Stock Units and Convertible Stock Units

        We have a Non-Qualified Stock Purchase Plan (SPP) pursuant to which our highly compensated employees (those earning more than approximately $95,000 per year in fiscal 2006) may defer compensation that they might otherwise have contributed to our Retirement and Savings Plan but are disqualified under applicable law from doing so. As a result of these deferrals, employees are credited with common stock units on a tax-deferred basis. The common stock units may only be redeemed for common stock. The holders of common stock units are not entitled to vote but are credited with any dividends that are declared on the common stock. In the event of our liquidation, holders of common stock units will be entitled to the same rights as holders of our common stock.

        Our highly compensated employees who receive common stock units through our SPP may elect to exchange their common stock units for convertible preferred stock units. The holders of convertible preferred stock units are not entitled to vote. The convertible preferred stock units may only be redeemed for shares of our convertible preferred stock.

Delaware Law

        We are subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date on which the person becomes an interested stockholder, unless (i) prior to the time that such stockholder becomes an interested stockholder, the Board of Directors approves such transaction or business combination, (ii) the stockholder acquires more than 85% of the outstanding voting stock of the corporation (excluding shares held by directors who are officers or held in employee stock plans) upon consummation of such transaction, or (iii) at or subsequent to the time such stockholder becomes an interested stockholder, the business combination is approved by the Board of Directors and by two-thirds of the outstanding voting stock of the corporation (excluding shares held by the interested stockholder) at a meeting of stockholders (and not by written consent). A "business combination" includes a merger, asset sale or other transaction resulting in a financial benefit to such interested

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stockholder. For purposes of Section 203, "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation's voting stock.

Certificate of Incorporation and Bylaws

        Various provisions of our Certificate of Incorporation and Bylaws, which are summarized in the following paragraphs, may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders.

        No Cumulative Voting.    The Delaware General Corporation Law provides that stockholders are denied the right to cumulate votes in the election of directors unless our Certificate of Incorporation provides otherwise. Our Certificate of Incorporation does not expressly address cumulative voting.

        No Stockholder Action by Written Consent; Calling of Special Meetings of Stockholders. Our Certificate of Incorporation prohibits stockholder action by written consent. It also provides that special meetings of our stockholders may be called only by the Board of Directors or the chief executive officer.

        Advance Notice Requirements for Stockholder Proposals and Director Nominations.    Our Bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary. To be timely, a stockholder's notice must be delivered or mailed and received at our principal executive offices not less than 60 nor more than 90 days prior to the meeting. Our Bylaws also specify requirements as to the form and content of a stockholder's notice. These provisions may impede stockholders' ability to bring matters before an annual meeting of stockholders or make nominations for directors at an annual meeting of stockholders.

        Classified Board of Directors.    Our Certificate of Incorporation divides our board of directors into three classes of directors who are elected for three-year terms. Therefore, the full board of directors is not subject to re-election at each annual meeting of our stockholders.

        Limitations on Liability and Indemnification of Officers and Directors.    The Delaware General Corporation Law authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties. Our Certificate of Incorporation includes a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director, except for liability:

        Our Bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by the Delaware General Corporation Law. We are also expressly authorized to carry directors' and officers' insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and officers.

        The limitation of liability and indemnification provisions in our Certificate of Incorporation and Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their

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fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders.

        There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

        Authorized But Unissued Shares.    Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without the approval of holders of common stock. We may use these additional shares for a variety of corporate purposes, including future offerings to raise additional capital, corporate acquisitions and employee benefit plans.

        Supermajority Provisions.    Under our Certificate of Incorporation, we must receive the consent of the holders of at least two-thirds of the outstanding shares of our capital stock, voting together as a single class, to approve a "business combination." A business combination is defined as:

Transfer Agent and Registrar

        The transfer agent and registrar for our common stock is Computershare Investor Services.

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

        The following is a general discussion of the material United States federal income tax consequences of the ownership and disposition of our common stock to a non-United States holder. This discussion assumes that non-United States holders will hold our common stock issued pursuant to the offering as a capital asset (generally, property held for investment). This discussion does not address all aspects of United States federal income taxation that may be relevant in light of a non-United States holder's special tax status or special tax situations. For example, United States expatriates, life insurance companies, tax-exempt organizations, dealers in securities or currency, banks or other financial institutions, pass-through entities, trusts, estates, and investors that hold common stock as part of a hedge, straddle or conversion transaction are among those categories of potential investors that are subject to special rules not covered in this discussion. In addition, this discussion does not address tax consequences to a holder of the use of a functional currency other than the United States dollar. This discussion does not address any tax consequences arising under the laws of any state, local or non-United States taxing jurisdiction or any taxes other than income taxes. Furthermore, the following discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, legislative history and Treasury Regulations and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. Accordingly, we urge each non-United States Holder to consult a tax advisor regarding the United States federal, state, local and non-United States income and other tax consequences of acquiring, holding and disposing of shares of our common stock.

        For the purpose of this discussion, a non-United States holder is any individual, corporation, estate or trust that is a beneficial holder of our common stock and that for United States federal income tax purposes is not a United States person. For purposes of this discussion, the term United States person means:

        If a partnership (or an entity treated as a partnership for United States federal income tax purposes) holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. Accordingly, we urge partnerships which hold our common stock and partners in such partnerships to consult their tax advisors.

        Investors considering the purchase of common stock should consult their tax advisors regarding the application of the U.S. federal income tax laws to their particular situations and the consequences of U.S. federal estate and gift tax laws, foreign, state and local laws, and tax treaties.

        Distributions on our common stock, if any, generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce a

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holder's adjusted tax basis in the common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of the common stock.

        Amounts treated as dividends paid to a non-United States holder of common stock generally will be subject to United States withholding at a rate of 30% of the gross amount of the dividend, unless either: (a) an applicable income tax treaty reduces or eliminates such tax, and the non-United States holder properly claims the benefit of that treaty by providing a valid IRS Form W-8BEN (or suitable successor or substitute form) establishing qualification for the reduced rate, or (b) the dividend is effectively connected with the non-United States holder's conduct of a trade or business in the United States and the non-United States holder provides an appropriate statement to that effect on a valid IRS Form W-8ECI (or suitable successor form).

        Dividends received by a non-United States holder that are effectively connected with a United States trade or business conducted by the non-United States holder are generally taxed at the same graduated rates applicable to United States persons, net of certain deductions and credits, subject to an applicable income tax treaty providing otherwise. In that case, the 30% withholding tax described above will not apply, provided the appropriate statement is provided to us. If a non-United States holder is eligible for the benefits of a tax treaty between the United States and its country of residence, any dividend income that is effectively connected with a United States trade or business will be subject to United States federal income tax in the manner specified by the treaty and generally will only be subject to such tax if such income is attributable to a permanent establishment (or a fixed base in the case of an individual) maintained by the non-United States holder in the United States and the non-United States holder claims the benefit of the treaty by properly submitting an IRS Form W-8BEN. In addition, dividends received by a corporate non-United States holder that are effectively connected with a United States trade or business of the corporate non-United States holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.

        A non-United States holder may obtain a refund from the IRS to the extent that the amounts withheld as described above exceed that holder's tax liability if an appropriate claim for refund is timely filed with the IRS.

        If a non-United States holder holds our common stock through a foreign partnership or other passthrough entity or a foreign intermediary, the foreign partnership or passthrough entity or foreign intermediary may also be required to comply with additional certification requirements.

        A non-United States holder generally will not be subject to United States federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

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        If the first of these exceptions applies, the non-United States holder generally will be subject to tax at a rate of 30% on the amount by which the United States-source capital gains exceed capital losses allocable to United States sources.

        If the second exception applies, generally the non-United States holder will be required to pay United States federal income tax on the net gain derived from the sale in the same manner as a United States person. If a non-United States Holder is eligible for the benefits of a tax treaty between the United States and its country of residence, any such gain will be subject to United States federal income tax in the manner specified by the treaty and generally will only be subject to such tax if such gain is attributable to a permanent establishment (or a fixed base in the case of an individual) maintained by the non-United States holder in the United States and the non-United States holder claims the benefit of the treaty by properly submitting an IRS Form W-8BEN (or suitable successor form). Additionally, non-United States holders that are treated for United States federal income tax purposes as corporations and that are engaged in a trade or business or have a permanent establishment in the United States could be subject to a branch profits tax on such income at a 30% rate or a lower rate if so specified by an applicable income tax treaty.

        Generally, we must report annually to the IRS the amount of dividends paid, the name and address of the recipient, and the amount, if any, of tax withheld. Subject to certain exceptions, a similar report is sent to the holder. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in the recipient's country of residence.

        Payments of dividends or of proceeds on the disposition of stock made to a non-United States holder may be subject to backup withholding unless the non-United States holder establishes an exemption, for example, by properly certifying its non-United States status on a valid IRS Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a United States person.

        Additional information reporting and backup withholding may apply in the case of dispositions of our common stock by non-United States brokers effected through certain brokers or a United States office of a broker. The backup withholding rate currently is 28%.

        Backup withholding is not an additional tax. Rather, the United States income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.

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SHARES ELIGIBLE FOR FUTURE SALE

        Upon the consummation of the offering, we will have            shares of common stock outstanding (assuming no exercise of the underwriters' over-allotment option). All of the shares of common stock sold in the offering will be freely tradable under the Securities Act. Upon the expiration of lock-up agreements between our directors, executive officers, certain of our stockholders who hold either certificated securities or who hold securities under one or more of our stock plans and the underwriters, which will occur 180 days after the date of this prospectus, or the Effective Date, all of the shares of common stock owned by these stockholders, or Restricted Shares, will become eligible for sale, subject to compliance with Rule 144 of the Securities Act as described below.

        In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who has beneficially owned Restricted Shares for at least one year, will be entitled to sell in any three-month period a number of shares that does not exceed the greater of: (i) 1% of the number of shares of Common Stock then outstanding (            shares immediately after the offering or            if the underwriters' over-allotment is exercised in full) or (ii) the average weekly trading volume of our common stock on the NYSE during the four calendar weeks immediately preceding the date on which the notice of sale is filed with the Securities and Exchange Commission. Approximately            shares of the Restricted Shares have been held for over one year. Sales pursuant to Rule 144 are subject to requirements relating to manner of sale, notice and availability of current public information about us. A person (or persons whose shares are aggregated) who is not deemed to be an affiliate of ours preceding the sale, and who has beneficially owned Restricted Shares for at least two years is entitled to sell such shares pursuant to Rule 144(k) without regard to the limitations and requirements described above.

        Our directors, executive officers and certain stockholders who hold either certificated securities or who hold securities under one or more of our stock plans have agreed with the underwriters not to directly or indirectly, offer to sell, contract to sell, sell or otherwise dispose of any common stock or any securities convertible into or exercisable or exchangeable for common stock without the prior written consent of Morgan Stanley & Co. Incorporated until                        , 200    .

        In addition, employees of ours who hold            outstanding shares of common stock and options to acquire              additional shares of common stock are entitled to rely on the resale provisions of Rule 701, which permit non-affiliates to sell their Rule 701 shares without having to comply with the public information, holding period, volume limitation or notice provisions of Rule 144 and permit affiliates to sell Rule 701 shares without having to comply with Rule 144's holding period restrictions, in each case commencing 90 days after the date of completion of this offering.

        Not earlier than 90 days after the date of completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register shares of common stock reserved for issuance under our Stock Incentive Plans, thus permitting the resale of such shares by non-affiliates in the public market without restriction under the Securities Act. As of                        , 2007, there were outstanding options to purchase            shares of our common stock under our Stock Incentive Plans. An additional             shares are reserved for issuance under our Stock Incentive Plans. This registration statement will become effective immediately upon filing.

        We are unable to estimate the number of shares that may be sold in the future by the existing stockholders or the effect, if any, that sales of shares by such stockholders will have on the market price of our common stock. Sales of substantial amounts of common stock by such stockholders could adversely affect the market price of our common stock.

109



UNDERWRITERS

        Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. Incorporated is acting as representative, have severally agreed to purchase, and we and the selling stockholders have agreed to sell to them, severally, the number of shares indicated below:

Name

  Number of Shares
Morgan Stanley & Co. Incorporated    
Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated
   
UBS Securities LLC    
Credit Suisse Securities (USA) LLC    
D.A. Davidson & Co.    
Goldman, Sachs & Co.    
   
                      Total:     
   

        The underwriters are collectively referred to as the "underwriters" and the representative is referred to as the "representative." The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' over-allotment option described below.

        The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representative.

        We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to            additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter's name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

        The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling stockholders. These amounts are

110



shown assuming both no exercise and full exercise of the underwriters' option to purchase up to an additional                  shares of common stock.

 
  Total
 
  Per
Share

  No Exercise
  Full Exercise
Public offering price   $     $     $  
Underwriting discounts and commissions to be paid by:                  
  Us   $     $     $  
  The selling stockholders   $     $     $  
Proceeds, before expenses, to us   $     $     $  
Proceeds, before expenses, to selling stockholders   $     $     $  

        The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $                  .

        The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

        We are applying to have our common stock traded on the New York Stock Exchange under the symbol "ACM."

        We and all directors and officers and certain of our stockholders who hold securities under one or more of our stock plans have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus:


whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, we and each such person agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not, during the period ending 180 days after the date of this prospectus, make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.

        The restrictions described in the immediately preceding paragraph do not apply to:

111



        The 180 day restricted period described in the preceding paragraph will be extended if:

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18 day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless such extension is waived, in writing, by Morgan Stanley & Co. Incorporated.

        In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

        We, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

        A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representative may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters that may make Internet distributions on the same basis as other allocations.

European Economic Area

        In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each Manager has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Member State it has not made and will

112



not make an offer of Shares to the public in that Member State, except that it may, with effect from and including such date, make an offer of Shares to the public in that Member State:

        For the purposes of the above, the expression an "offer of Shares to the public" in relation to any Shares in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Shares to be offered so as to enable an investor to decide to purchase or subscribe the Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in that Member State.

United Kingdom

        Each Manager has represented and agreed that it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of the Shares in circumstances in which Section 21(1) of such Act does not apply to us and it has complied and will comply with all applicable provisions of such Act with respect to anything done by it in relation to any Shares in, from or otherwise involving the United Kingdom.

Pricing of the Offering

        Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined by negotiations between us and the representative. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

Other Relationships

        Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us. They have received customary fees and commissions for these transactions.


LEGAL MATTERS

        The validity of the shares of common stock offered hereby will be passed upon for us by Gibson, Dunn & Crutcher LLP, Los Angeles, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Latham & Watkins LLP, Los Angeles, California.

113




EXPERTS

        The consolidated financial statements of AECOM Technology Corporation at September 30, 2006 and 2005, and for the three year period ended September 30, 2006, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.


WHERE YOU CAN FIND ADDITIONAL INFORMATION

        We have filed with the Securities and Exchange Commission (the "Commission"), Washington, D.C. 20549, a registration statement on Form S-1 under the Securities Act with respect to the common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits thereto. Certain items are omitted in accordance with the rules and regulations of the Commission. For further information with respect to us and the common stock offered by this prospectus, please refer to the registration statement and the exhibits filed herewith or incorporated by reference as a part hereof. Statements contained in this prospectus as to the contents of any contract or other document filed herewith or incorporated by reference as an exhibit to the registration statement is qualified in all respects by such reference to such exhibit.

        The registration statement, including exhibits thereto, may be inspected without charge at the public reference facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part thereof may be obtained from such office after payment of fees prescribed by the Commission. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference facilities. The Commission maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. We will become subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and will file periodic reports, proxy statements and other information with the Commission.

        We intend to issue to our stockholders annual reports, which will include audited financial statements and a report of our independent auditors with respect to the examination of such financial statements. In addition, we will issue such other interim reports as we deem appropriate.

114



AECOM Technology Corporation

Index to Consolidated Financial Statements

September 30, 2006

Audited Annual Financial Statements    

Report of Independent Registered Public Accounting Firm

 

F-2

Consolidated Balance Sheets at September 30, 2005 and 2006

 

F-3

Consolidated Statements of Income for the Years Ended September 30, 2004, 2005 and 2006

 

F-4

Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2004, 2005 and 2006

 

F-5

Consolidated Statements of Changes in Stockholders' Deficit for the Years Ended September 30, 2004, 2005 and 2006

 

F-6

Consolidated Statements of Cash Flows for the Years Ended September 30, 2004, 2005 and 2006

 

F-7

Notes to Consolidated Financial Statements

 

F-8

Unaudited Interim Financial Statements

 

 

Condensed Consolidated Balance Sheets as of September 30, 2006 and December 31, 2006

 

F-56

Condensed Consolidated Statements of Income for the Three Months Ended December 31, 2005 and 2006

 

F-57

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2005 and 2006

 

F-58

Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2005 and 2006

 

F-59

Notes to Condensed Consolidated Financial Statements

 

F-60

F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of
AECOM Technology Corporation

        We have audited the accompanying consolidated balance sheets of AECOM Technology Corporation (the "Company"), as of September 30, 2006 and 2005, and the related consolidated statements of income, comprehensive income, stockholders' deficit, and cash flows for each of the three years in the period ended September 30, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AECOM Technology Corporation at September 30, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2006, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP
   

Los Angeles, California
March 5, 2007

F-2



AECOM Technology Corporation

Consolidated Balance Sheets

(in thousands, except share data)

 
  September 30,
2005

  September 30,
2006

 
ASSETS              
CURRENT ASSETS:              
  Cash and cash equivalents   $ 27,424   $ 118,427  
  Cash in consolidated joint ventures     26,878     9,393  
  Short-term investments     50     50  
   
 
 
  Total cash and cash equivalents     54,352     127,870  
 
Accounts receivable—net

 

 

703,837

 

 

913,178

 
  Prepaid expenses and other current assets     48,541     52,827  
  Deferred tax assets—net     15,531      
   
 
 
    TOTAL CURRENT ASSETS     822,261     1,093,875  
   
 
 
PROPERTY AND EQUIPMENT:              
  Equipment, furniture and fixtures     84,208     85,201  
  Leasehold improvements     23,685     31,539  
   
 
 
    Total     107,893     116,740  
  Accumulated depreciation and amortization     (28,365 )   (26,417 )
   
 
 
    PROPERTY AND EQUIPMENT—NET     79,528     90,323  
   
 
 
DEFERRED TAX ASSETS—NET     36,459     98,449  
DEFERRED LOAN COSTS—NET     1,478     1,444  
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES     19,230     19,943  
GOODWILL     404,063     466,508  
INTANGIBLE AND OTHER ASSETS—NET     32,216     18,168  
OTHER NON-CURRENT ASSETS     29,689     37,064  
   
 
 
TOTAL ASSETS   $ 1,424,924   $ 1,825,774  
   
 
 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 
CURRENT LIABILITIES:              
  Short-term debt   $ 4,165   $ 2,716  
  Accounts payable and other current liabilities     179,810     265,192  
  Accrued expenses     273,856     365,548  
  Billings in excess of costs on uncompleted contracts     122,825     143,283  
  Income taxes payable     11,373     35,646  
  Deferred tax liability—net         12,824  
  Current portion of share purchase liability     43,215     55,394  
  Current portion of long-term obligations     16,374     11,949  
   
 
 
    TOTAL CURRENT LIABILITIES     651,618     892,552  

OTHER LONG-TERM LIABILITIES

 

 

126,243

 

 

112,970

 
LONG-TERM OBLIGATIONS     216,183     122,790  

COMMITMENTS AND CONTINGENCIES (Notes 11, 18 and 22)

 

 

 

 

 

 

 

MINORITY INTEREST

 

 

9,724

 

 

18,701

 
REDEEMABLE COMMON AND PREFERRED STOCK AND STOCK UNITS     622,140     771,207  
NOTES RECEIVABLE FROM STOCKHOLDERS     (36,103 )   (36,552 )
REDEEMABLE PREFERRED STOCK, Class D—authorized, 120,000, issued and outstanding, 75,000 and 0 as of September 30, 2005 and September 30, 2006, respectively     75,000      
REDEEMABLE PREFERRED STOCK, Class F—authorized, 200,000, issued and outstanding, 0 and 47,000 as of September 30, 2005 and September 30, 2006, respectively, $2,500 liquidation preference value         117,500  
REDEEMABLE PREFERRED STOCK, Class G—authorized, 200,000, issued and outstanding, 0 and 47,000 as of September 30, 2005 and September 30, 2006, respectively, $2,500 liquidation preference value         117,500  

STOCKHOLDERS' DEFICIT:

 

 

 

 

 

 

 
  Stock warrants issued with Class D convertible preferred stock     1,605      
  Additional paid-in capital     (176,089 )   (254,225 )
  Accumulated other comprehensive loss     (65,397 )   (36,669 )
  Retained earnings          
   
 
 
TOTAL STOCKHOLDERS' DEFICIT     (239,881 )   (290,894 )
   
 
 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $ 1,424,924   $ 1,825,774  
   
 
 

See accompanying Notes to Consolidated Financial Statements.

F-3



AECOM Technology Corporation

Consolidated Statements of Income

(in thousands, except per share data)

 
  Fiscal Year Ended
 
  September 30,
2004

  September 30,
2005

  September 30,
2006

Revenue   $ 2,011,975   $ 2,395,340   $ 3,421,492

Cost of revenue

 

 

1,443,419

 

 

1,717,863

 

 

2,515,684
   
 
 
  Gross profit     568,556     677,477     905,808

Equity in earnings of joint ventures

 

 

2,517

 

 

2,352

 

 

6,554
General and administrative expenses     484,446     581,529     808,953
   
 
 
  Income from operations     86,627     98,300     103,409
   
 
 
Minority interest in share of earnings     3,239     8,453     13,924
Interest expense—net     6,968     7,054     10,576
   
 
 
  Income before income tax expense     76,420     82,793     78,909

Income tax expense

 

 

25,984

 

 

28,979

 

 

25,223
   
 
 
Net income   $ 50,436   $ 53,814   $ 53,686
   
 
 
Net income allocation:                  
  Preferred stock dividend   $ 5,443   $ 5,506   $ 2,205
  Net income available for common stockholders     44,993     48,308     51,481
   
 
 
  Net income   $ 50,436   $ 53,814   $ 53,686
   
 
 
Net income per share:                  
  Basic   $ 1.71   $ 1.86   $ 1.88
   
 
 
  Diluted   $ 1.57   $ 1.68   $ 1.48
   
 
 
Weighted average shares outstanding:                  
  Basic     26,300     25,940     27,428
  Diluted     32,127     31,989     36,329

See accompanying Notes to Consolidated Financial Statements.

F-4



AECOM Technology Corporation

Consolidated Statements of Comprehensive Income

(in thousands)

 
  Fiscal Year Ended
 
  September 30,
2004

  September 30,
2005

  September 30,
2006

Net income   $ 50,436   $ 53,814   $ 53,686
   
 
 
Other comprehensive income (loss):                  
Foreign currency translation adjustments     2,183     (7,308 )   11,236
Minimum pension liability adjustments     5,841     (26,356 )   17,492
   
 
 
Other comprehensive income (loss)     8,024     (33,664 )   28,728
   
 
 
Comprehensive income   $ 58,460   $ 20,150   $ 82,414
   
 
 

See accompanying Notes to Consolidated Financial Statements.

F-5



AECOM Technology Corporation

Consolidated Statements of Changes in Stockholders' Deficit

(in thousands)

 
  September 30,
2004

  September 30,
2005

  September 30,
2006

 
STOCK WARRANTS:                    
Balance at the beginning of the year   $ 1,605   $ 1,605   $ 1,605  
Liquidation of Class D preferred stock